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After the chaotic local election results, the Conservatives’ best hope for turning things around is interest rate cuts.
The extra £900 in people’s pay packets as a result of employees’ national insurance being cut is not bringing voters back into the fold.
Implanted in the minds of citizens is the idea that the cost of mortgages and credit for consumers and businesses is high as a result of Truss’s tantrum.
Yes, the former prime minister may have caused an attack, but the real blame lies with China, where Covid-19 began, and with Moscow in the wake of Russian aggression against Ukraine.
Rishi Sunak and Jeremy Hunt have no direct control over interest rates.
Decision time: Bank of England’s Monetary Policy Committee under pressure to cut base rate from 5.25% at meetings this week
If the Bank of England were pressured to lower the bank rate from 5.25 percent, it could have the opposite effect: the interest rate-setting Monetary Policy Committee (MPC) would double down on the independence.
Tomorrow, when the MPC meets for its session, Governor Andrew Bailey will be able to show leadership.
Last month in Washington there was a change of tone, with Bailey optimistic that the supply-side factors that drove inflation up to 11 percent have receded.
This gives the Bank the option to take the initiative to reduce higher borrowing costs.
Markets have been confused by the mixed messages, with chief economist Huw Pill arguing that rates could stay high for longer.
He has only one vote in a nine-member committee where the summit hawks need to be brought down.
Nobody foresees a reduction in May. A measure of this type would give a boost to housing and consumer and business confidence. Bailey should take charge and lead the charge.
rogues gallery
Nikhil Rathi does not have much of a public profile. That will change this week when the UK’s top financial regulator is grilled by the Treasury Select Committee over his proposal to “name and shame” alleged wrongdoers in the City.
The idea has produced an avalanche of criticism from the Square Mile, with some 16 industry bodies (why do you need so many!) attacking it.
If that wasn’t bad enough, Jeremy Hunt has also weighed in, fearing that Rathi’s intervention could harm his Edinburgh reforms designed to unleash a wave of entrepreneurs.
As head of the Financial Conduct Authority (FCA), Rathi has been at the forefront of deregulation, advocating for an easing of bureaucracy for listings in London.
It should surprise no one that the city’s trade bodies are against “name and shame”.
FCA regulation is notoriously slow, taking an average of three years to act and, with several appeals, can drag on for five years.
This gives enough time for the wrongdoers to hire the best lawyers, clear the field and free the wrongdoers.
Rathi’s refreshing approach would put an end to a barrier to transparency that favors hooligans at the expense of victims of bad behavior. Upsetting an independent rules maker is not a good idea.
next act
Charlie Munger’s death focused attention on succession at this year’s ‘Woodstock for Capitalists’ in Omaha, Nebraska, home of 93-year-old Warren Buffett’s Berkshire Hathaway.
Buffett assured his followers that in vice-chairmen Greg Abel and Ajit Jain he had the right people to grow the legacy of his quirky £690bn investment fund.
But with £150 billion in cash on the balance sheet, the oracle is still looking for the next one: Geico, Coca-Cola or Apple.