Broadcaster & Economics Expert Dr Roger Gewolb Warns Bailey
“Inflation is decreasing, Bank of England must cut interest rates now”
Finance, Geopolitics/economics trends expert and eminent broadcaster Dr Roger Gewolb, head of the Campaign for Fair Finance ™, comments on today’s data from the Office of National Statistics, which showed the annual rate of CPI inflation increased from 3.9% in November to 4.0% in December 2023.
Dr Gewolb says “The small December’s increase in the headline inflation is due to the rise of the price of alcohol and tobacco driven by the increase in the tobacco duty announced by the Chancellor’s Autumn Statement. There is no need for the Bank of England to increase interest rates, they must instead cut interest rates sooner, raising interest rates once again will only prolong this type of inflation, will lower business confidence and will turn the country into a ‘stagnation nation’”.
Forecasting potential inflation bumps over the next couple of months, Roger adds, “With the current disturbances in supply chains, the 5% rise in the Ofgem price cap from 1st January, prices could cause inflation to bump up again, plus we will see the full effects of increased shipping costs due to Red Sea. Even if this leads to an increase in wages, it is still a result of cost-push inflation and further rate rises will not be able to curb it”.
Prices for various recreational goods, such as tobacco, alcohol, DVDs, computer games, sports equipment, cat food, and theatre admissions, have also gone up. According to Roger, “The rise in food prices is not over, even though the key price index has fallen back to pre-Russian war levels, the real problem is businesses continuing to overcharge for their services, which they currently have no reason to do as the pressures they felt last year is now gone but are still charging higher passing those costs into consumers.”
According to Roger, “inflation is still decreasing, but it is not due to the interest rates imposed by The Bank of England, nor any actions taken by the government. Rather, prices were expected to fall naturally after reaching high levels in 2022, which were affected by rising energy prices resulting from the Ukraine war.”
“We are heading in the right direction. Lenders have reduced mortgage rates today, indicating a positive market response to the UK’s falling cost-push inflation, which usually happens on its own. Making money more expensive does not deter people from spending on essential items like food and fuel, and it certainly won’t resolve issues like the shipping situation in the Strait of Hormuz. We should not exacerbate the damage already done to the British economy.”
Roger Gewolb has previously criticised the BoE’s for raising interest rates fourteen consecutive times as well as the Bank’s decision to hold interest rates at 5.25%, stating that “it’s time for the Bank to take action to avoid further negative impacts”. Along with noted economist Catherine McBride and other experts, he has been calling for the Bank to reduce interest rates immediately and introduce major reforms.
Gewolb has been vocal throughout his expert comments across UK National media about Andrew Bailey and BoE mismanagement of the UK monetary policy; “The issue with keeping interest rates higher for longer in the current tight UK labour market means that companies will pass on costs to consumers to try and protect their profit margins, which could lead to a prolonged period of higher core inflation, and this is what is exactly happening right now,” he explains.
After his recent visit to the United States, where he had discussions with prominent geopolitical and economic experts as well as members of both Donald Trump’s and Joe Biden’s teams, Gewolb has observed that inflation in the US “is mainly fuelled by consumer demand, which is quite different from how it works in the UK. The Federal Reserve may start raising interest rates soon. However, the Bank of England’s Governor, Andrew Bailey, and his colleagues should not blindly follow the United States’ lead. They need to listen to various perspectives before making a decision, as blindly following the US would be a wrong move.”
You can read Roger Gewolb’s previous analysis of the Bank Of England’s monetary policy in his Business Leader column here.