So here’s the dilemma for the Bank of England. Do they push up interest rates further, pushing firms to cut jobs, pushing down the amount others still hiring need to pay to get and keep staff, and so pushing down inflation. In theory. Or would the natural course of economic affairs if they leave or reduce rates, bring inflation down anyway, with a lot less resultant joblessness and human misery. The ‘in theory’ is the key to this, as economics, as every economist will tell you as they comprehensively cover their backs, is not an exact science, if indeed it’s a science at all. Pesky people and unpredictable world events tend to get in the way and today’s theory is tomorrow’s history. The only answer is to always be prepared for rainy days. If you can afford a mac (of the old-fashioned type) and a brolly.
The head of the Bank of England and his fellow ‘Central Bankers’ around the world have been talking doom and gloom. But many, including our favoured portfolio managers, have taken some heart at this.