Simon Lambert

We're not going to rush the judgments on those things because there's a lot of uncertainty around this, not just how it's going to play out, but also how it's going to pass through into the UK economy.

Who would be a rate setter right now?

In theory, when inflation is going up and expectations of inflation are going up, you raise interest rates.

By raising interest rates, you increase the cost of borrowing money and that reduces the demand for borrowing money and that reduces the money going into the economy and slows the economy down and in theory then should drag down future inflation and the path of future inflation.

But...

What if you're in a situation where the inflation is coming from something that you have absolutely no control over?

It literally does not matter what the Bank of England does with interest rates.

Inflation from the higher oil price due to the Iran war is going to come through and kick in anyway.

But I think what you need to remember when you look at what central banks do is we always frame it in the

they're going to do this because this stuff has happened way, right?

So they're going to have to do this because the oil price has gone up.

Actually, the Bank of England isn't really acting to do anything about the oil price already having gone up.

The Bank of England's rate setters know that whatever they do, they can't change what's happened in the past.

Short of getting a DeLorean, going back in time, changing some things.

But we've all seen the movie that shows that that sometimes doesn't work out how that's going to be planned.

So what they're trying to do is they're trying to change things immediately.

In the future.

Right.

So they're trying to go right.

Well, the oil prices shot up due to somebody deciding to set fire to the world.