Mr Bailey will meet with other decision makers in November (Yui Mok/PA)
(Picture: PA Wire)The Wall Street traders motto goes like this: Don’t Fight The Fed.
The sentiment is that if the almighty US Federal Reserve decides it is going to intervene in markets to support stock markets, attack inflation or send borrowing costs lower, you would be a fool to bet against it.
In the US that applies as much as it ever did.
In the UK, a tussle between the central bank and the markets ought also to have one winner.
But the outcome of such a fight presently seems markedly uncertain.
The Bank of England is damaged, some from self-inflicted wounds and some from things outside of its control, notably the war in Ukraine.
Last night the Bank put out a statement intended to reassure markets unnerved by last Friday’s budget and salvage Sterling.
“The MPC will not hesitate to change interest rates by as much as needed,” said Governor Andrew Bailey.
In response, markets promptly resumed selling England by the pound. Investors found the statement panicky and wondered how much firepower the Old Lady of Threadneedle Street really has left.
The pound in your pocket is beginning to look a bit more like 99 cents.
Collectively, markets just looked at what the Bank of England had to say, measured its nerve and its predicament, and went: twist.
What happens over the next few days could be as important as almost any period in our recent, troubled, economic history.
If the markets don’t believe in Andrew Bailey, they are hardly any more likely to give the benefit of the doubt to Kwasi Kwarteng and co.
If you aren’t concerned, you aren’t paying attention.
