Every month the BofE raises the interest rate bit by bit, knowing inflation is so high and knowing they had to raise the rates quite high, why do it so slowly?
In: 35
Imagine you’re on the highway and traffic suddenly clears up. You’re going 5 mph under the speed limit so you decide to accelerate.
Do you floor the gas pedal or do you gently increase the throttle until you reach the speed limit and then let up to maintain speed?
It’s the same sort of deal, only infinitely more complicated. They have to do it slowly because big movements *cause* big movements and it’s not always going to do what they want it to do. Economics isn’t an exact science, they can’t just plug the Global Economy into a spreadsheet and have it spit out a number they need to change the interest rate to in order to reach a desired Local Economy goal.
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