Central banks can’t solve our current economic problems

Traditionally, as we hit recessionary times, central banks have lowered interest rates. But that’s not an option this time. If anyone can help dull the economic pain, it’s not the Bank of England, it’s the government. John Stepek explains why.

Andrew Bailey of the Bank of England
If the Bank of England wants to stop inflation, it will have to raise rates so high that it inflicts a recession
(Image credit: © Stefan Rousseau - WPA Pool/Getty Images)

Today at noon, we get the Bank of England’s latest interest rate decision.

The main UK interest rate is currently sitting at 1.25%. Markets expect the Bank to raise that to 1.75%. That half-point increase would be the biggest rise since 1995 (and the Bank wasn’t even independent back then).

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John Stepek

John Stepek is a senior reporter at Bloomberg News and a former editor of MoneyWeek magazine. He graduated from Strathclyde University with a degree in psychology in 1996 and has always been fascinated by the gap between the way the market works in theory and the way it works in practice, and by how our deep-rooted instincts work against our best interests as investors.

He started out in journalism by writing articles about the specific business challenges facing family firms. In 2003, he took a job on the finance desk of Teletext, where he spent two years covering the markets and breaking financial news.

His work has been published in Families in Business, Shares magazine, Spear's Magazine, The Sunday Times, and The Spectator among others. He has also appeared as an expert commentator on BBC Radio 4's Today programme, BBC Radio Scotland, Newsnight, Daily Politics and Bloomberg. His first book, on contrarian investing, The Sceptical Investor, was released in March 2019. You can follow John on Twitter at @john_stepek.