Low pay, low inflation and low interest rates? This is not 1975
by Larry Elliott from on (#HHM8)
The debate over an interest rate hike labours on in both the UK and the US, but static pay and minimal inflation means ultra-low rates are staying put
August 1975. Harold Wilson was prime minister. Gerald Ford had been in the White House for a year following Richard Nixon's resignation. Steven Spielberg's Jaws was the summer blockbuster and inflation in Britain hit a postwar peak of 27%.
Statutory incomes policy was Wilson's response to the cost of living crisis in what now seems like a completely different world. With inflation non-existent, today's central banks have a big decision to make. Is it safe to go back in the water and start raising interest rates for the first time since the global financial crisis and recession of 2007-09?
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