“I am powerless in the face of inflation. We risk a food apocalypse “. The drama of the Governor of the English Central Bank
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The Governor of the Bank of England today issued an "apocalyptic" warning about rising food prices and said he felt "powerless" in the fight against inflation, saying that the continuation of the war in Ukraine could further increase the cost of living, according to the Daily Mail .
Governor Andrew Bailey revealed that a further increase in food inflation is a major concern for the Central Bank, with particular concerns over the prices of wheat and edible oils, all after an interview with the Kyiv finance minister. which presented him with the problem of transporting these important foodstuffs. Ukraine is estimated to supply 10% of the world's wheat and is also a major producer of sunflower oil.
The spike in commodity prices has already had a huge impact on food production around the world and has been a key factor in runaway prices squeezing household budgets.
" The main driver of inflation is the shock from external prices and this greatly reduces disposable income ," Bailey told MPs. " This will have an impact on domestic demand and reduce economic activity, and I fear it will increase unemployment ." That is the classic case of stagflation
Asked by MPs if he felt "powerless" to do anything about inflation, Mr. Bailey replied "yes" . Presenting himself before the Treasury Committee of the House of Commons, Bailey warned that the problems linked to the conflict in Ukraine are "aggravating".
In his exchanges with lawmakers, the Governor also confirmed his earlier assertion that workers shouldn't ask for large wage increases – despite the cost-of-living crisis – in an effort to keep soaring inflationary spiraling.
Mr. Bailey, who quietly earns £ 570,000 a year as governor of Threadneedle Street, home of the Bank Of England, told MPs that high-income workers should " think and think " before asking for pay increases. Who knows what they will do after reflecting, perhaps, in front of an empty plate.
However, the governor is right when he says he cannot do much: we are not facing a crisis linked to monetary policy factors, but due to the supply crisis. To put it simply, products are lacking or they are too expensive, and in the face of this emergency, the central bank is not needed, but an industrial policy is needed that reduces production costs and encourages their increase, especially in agriculture . This is what no European country is doing for now.
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The article “I am powerless in the face of inflation. We risk a food apocalypse ”. The drama of the Governor of the English Central Bank comes from ScenariEconomici.it .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/sono-impotente-di-fronte-allinflazione-rischiamo-unapocalisse-alimentare-il-drammatico-del-governatore-della-banca-centrale-inglese/ on Tue, 17 May 2022 09:00:25 +0000.