COVID is causing supply disruptions the world over, evidenced by disruptions to supply chains and rising producer prices and consumer prices. Central banks are quick to suggest this is a temporary measure, and inflation will start to fall as quickly as it rose. And yet, they are also making noises about raising interest rates, as a way of controlling inflation. Last week the Bank of England was hinting that could happen sooner, rather than later, even as they implement quantitative easing. Phil Dobbie asks Prof Steve Keen whether there’s any merit in lifting rates in an economy struggling to recover. And what if inflation is here to stay? What policy can work for an economy where supply falls well short of demand and prices rise beyond the means of many lower paid workers?
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