What Britain’s Crisis Means for Global Inflation

Events are moving quickly in the UK. The Bank of England will today end its rescue mission for the nation’s pension system, and for its huge “gilt-edged” bond market. In Westminster, policy, personnel and reputations are on the line. Our latest coverage can be found here.

Yet while central banks want to hike rates to fight inflation, Britain’s gilts mess has proved to the rest of the world — if anyone doubted it — that raising rates can be very dangerous. After a decade of low rates, investors had an incentive to lever up and take more risk to try to eke out more returns.