The scenario for stagflation is pretty clear. ICY(somehow)MI:
- central banks aggressively tighten to combat inflation ... the Federal Reserve, for example, is embarking on what will be its most rapid tightening since at least 1994
- global recession risk rising
- War in Ukraine is ongoing and there is no end in sight to the quagmire
- accompanied by the energy price shock in Europe
- lockdowns in China are persisting (check out the collapse in the services PMI out yesterday ... second lowest reading ever) ... its 2020 all over again in China
The Bank of England nailed it, inadvertently or not, I dunno. But I suspect the MPC at the BoE are not dummies and there is no inadvertence about it:
- Sterling tumbles as BOE paints dire outlook on UK economy
- BOE raises bank rate by 25 bps from 0.75% to 1.00%, as expected
- BOE's Bailey: Risks to inflation are skewed to the upside
In brief from the BoE (check those links for more):
- raised its cash rate by 25bps, to 1%
- 3 ouf of 9 MPC (Monetary Policy Committee) members voted for a 50bp hike
- Governor Bailey warned he expects “a very sharp slowdown” for the economy ... & a recession is a serious risk
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