UK interest rates will have to rise again, according to John Stepek, in his Money Morning daily email.

Britain is booming, apparently. The Confederation of British Industry retail survey suggests that high street sales in March rose at their fastest pace in more than two years. Despite the Nationwide mumbling about a housing downturn, the February mortgage approvals figures remained at 119,000, above expectations. And the money supply continues to expand, with M4 annual growth up 12.7% in February, much the same as January’s figure.

To Stepek, and to me, this all looks like a warning that rates must rise in order to get inflation back in the bag. Inflation is a great trial to people – it makes planning ahead impossible because it’s so hard to tell the real price increases from the nominal ones. And it does not hit people evenly: it’s bad for everyone, but for some people (such as those on fixed incomes) it’s a disaster.

I had actually thought that rates would have gone up a little more by now, which might have calmed the inflationary expectations a little. Then I thought they would have to come down again because the weak performance of the European economies, our largest trading partners, would be depressing business which would need a rate cut. In fact Europe’s doing better than I feared.

But what am I doing? An economist reminding people of what he predicted?

From Adam Smith Institute

Tags: Libertarian, Politics, Liberty, Freedom