Commentary
Let’s understand the significance of the Bank of England’s announcement that it would start buying $65 billion in UK public debt. It represents an about-face on the previous policy of using central bank power to sop up excess liquidity in hopes of getting inflation under control. It’s like crossing a river halfway and then turning back in the other direction.
What exactly was the Bank of England seeing that caused this about-face? It was getting wild calls from pension-fund managers all over the country that the systems were about to collapse. They were demanding that the BoE reverse course in its war on inflation and stop raising rates. Incredibly, the central bank immediately gave in….