Simon Lambert

People demand bigger wage increases because they expect inflation to be higher and so on.

So

There is, unfortunately, the prospect of some tough love here.

The one thing I would say, though, is that the Bank of England and interest rate policy in general, whatever central bank you're talking about, is effectively a gigantic confidence trick.

what they're trying to do is convince you of something and what they'll try to do before they try to convince you of something by raising interest rates by a quarter point or whatever is try to convince you of something by threatening to raise interest rates or sort of hinting that they might raise interest rates because sometimes

That is all you need to do.

The fact that there is the suggestion that rates might go up three times this year might mean that rates only need to go up one time this year or maybe not at all.

Because if we think that rates are going to go up three times this year and if we worry about this and if we rein in our spending and businesses rein in their borrowing and rein in their spending as well, then it slows the economy down and has the desired effect.

Ironically, you would look at the economy and say the last thing it needs is slowing down, however.

But the Bank of England's job is not to manage the economy.

That is the government's job.

The Bank of England's monetary policy committee's job is to try to hit the 2% inflation target.

And just before I finish speaking, there is a new acronym for a trade.

You know, we had the TACO trade.

Trump always chickens out.

Well, we've now got the nacho trade or the nacho scenario, which is not a chance Hormuz opens.

I tell you what I think is interesting, gilts and gilt yields.

You can pick up 5.057% on the 10-year gilt yield at the moment, right?

I think we're going to see continued interest from people investing directly in gilts.

Now, you know, that yield could go up further, but it's already gone up in the expectation of interest rate rises.