Once upon a time, doctors would bleed patients who were in poor health as a cure. We now know this was not a good idea, and yet the Bank of England keeps raising its base rate while predicting a prolonged recession (Report, 4 August). Why? Because this is the traditional way to try to curb inflation when an economy is overheating. Raising interest rates is supposed to divert excess liquidity from spending to saving. But millions are already in poverty and the energy cost increases in the autumn will make matters worse. There is no excess liquidity.
Most importantly, current pressures are due to external factors – mainly the Ukraine war, so how can raising interest rates help? Could it be that the Bank feels it must be seen to be doing something? I would call this the Titanic syndrome, ie we know it won’t do any good, but let’s rearrange the deck chairs anyway.
Jean-Claude Fouque
Cradley, Herefordshire
