IN a ‘blunt message’ to the BBC the Bank of England governor yesterday warned that interest rates may have to rise even higher, saying there is a ‘real risk’ of soaring prices becoming ‘embedded’.
He has just raised interest rates to 1.75% – the biggest rise in 27 years – with inflation now set to hit more than 13%, before the economy plunges into a slump with the longest collapse since 2008 predicted.
This was when Lehman Brothers went bust leading to a world wide crash, and years of austerity for the working class of the UK, and starvation for the ‘Third World’.
The Bank’s governor, Andrew Bailey, told BBC Radio 4’s Today programme: ‘The real risk we’re responding to is that inflation becomes embedded and it doesn’t come down in the way that we would otherwise expect.
Bailey warned against high pay rises, saying this would make inflation worse and ‘it’s the people who are least well off who are worse affected because they don’t have the bargaining power’.
However, Attorney General Suella Braverman said interest rates ‘should have been raised a long time ago’.
In response, Bailey said: ‘If you go back two years… given the situation we were facing at that point in the context of Covid, in the context of the labour market, the idea that at that point we would have tightened monetary policy, you know I don’t remember there were many people saying that.’
UK inflation – the rate at which prices rise – is currently at 9.4%, which is the highest level for more than 40 years. The Bank has warned it could peak at more than 13% and stay at ‘very elevated levels’ throughout much of next year, before ‘eventually’ returning to the Bank’s 2% target.
However, the main reason for high inflation and no growth, with soaring energy bills, is the US and UK’s ruling class decision to intervene in the Ukraine and supply the Ukrainians with the major advanced weaponry so that Russia can be bled dry, they hope.
It turns out that the main enemy of the UK and US bankers is the working class of the world, the US and UK trade unions and the workers states of Russia and China.
They are already imposing massive inflation on the workers of Europe and the USA, and starvation onto the workers of Africa and Asia since their number one strategic aim is to drive back the Russian and Chinese revolutions, with the workers and poor of the world paying the price for it.
They are playing for very high stakes, in which ‘their people’ are to be starved and oppressed, in order to confront Russia and China in a desperate attempt to maintain their world role.
Capitalism and its ruling classes are fighting for their right to rule over capitalist economies, and they are willing to starve millions world wide to do so!
Andrew Sentance, who was a member of the Bank’s rates-setting committee during the 2008 financial crisis, told BBC Breakfast: ‘We’re going to see a couple of years… when household incomes in real terms are squeezed much more severely than we’ve seen in other times since the Second World War.’
The economy is forecast to shrink in the final three months of this year and keep shrinking until the end of 2023. The expected recession would be the longest downturn since 2008, when the UK banking system faced collapse, bringing lending to a halt, and a dozen years of austerity for the working class.
The masses of the world are about to be starved, for the sake of keeping the US and UK ruling classes in place as rulers of the planet.
The UK, US and EU working classes must now defend their class interests and their families against the the bosses.
They must use the power of the trade unions to win a sliding scale of wages, so that wages automatically rise with inflation, and a sliding scale of hours, so that there are no sackings and hours are reduced to protect workers and their families with no loss in pay.
This will sustain the power of the working class to allow workers to organise new leaderships and general strikes to smash the capitalist governments and carry out socialist revolutions to destroy capitalism world wide and bring in a World Socialist Republic. Only the WRP and the Young Socialists fight for this policy. Join them today!