The COVID-19 pandemic has triggered a wave of unprecedented measures from both central bankers and governments. By stimulating economic activity and supporting households, the measures did help. In hindsight, it isn’t easy to imagine otherwise. But it all came at a cost. That is, unsustainable inflation. Inflation in the advanced economies has spiraled out of control. In the United Kingdom, it has reached the double-digit territory. The disconnect looks surreal. The Bank of England fights 10.1% inflation with 1.75% interest rates. At the same time, it targets 2% inflation. But why doesn’t the Bank of England raise ... (full story)