Israel's attacks on Iran are utterly unjustified, as I have explained this morning.
One of the potential consequences of the attacks is that international oil prices might rise. Almost certainly, that will be entirely unnecessary, but there is nothing that financial markets like more than the creation of a little stress as an opportunity for extracting additional profit out of people. There might be inflation as a result.
What I am already hearing is commentary suggesting that this will mean that UK interest rates cannot fall further, and might even need to increase, because that is, supposedly, the necessary action that must be taken to counter any inflationary risk. This, of course, is total nonsense. The creation of inflationary pressure as a result of an external event over which the UK either has no direct control, or over which has chosen to have no influence, can never be an occasion that creates the need for a change in interest rate policy to tackle the resulting inflation, on which interest rate policy can never have an impact.
We should have learnt our lesson on this from the supposed threat to oil supplies created by the war in Ukraine, and the consequent hike in both oil prices and inflation, and so interest rates. It did not take long for oil prices to return to their pre-war levels. Inflation, as a result, automatically dissipated because it was all based upon hype created by financial market traders, but we still have the exceptionally damaging consequences of high interest rates.
To be blunt, there are occasions when the Bank of England's Monetary Policy Committee needs to realise that they need to keep their nose out of things, and this will be one such occasion. There will be no need to punish UK households for Netanyahu's neo-fascist aggression.
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Dusting off my PhD in the Bleeding Obvious, if the message could be got out that interest rate rises were as a result of Israeli aggression it might create an ‘interesting’ situation tp put it mildly
The war mongers and neoconservatives in the UK and USA will never learn – look at Iraq they want to rinse and repeat, and look at the plight of Libya… The only despotic regimes that survive are those like Saudi Arabia that pay homage to Washington
re :Tackler says:
there’s long been a difference between UK and US views on Iran, for the US, Iran is the devil incarnate, they would like nothing better than to erase it, for the UK, including, or even especially the FO, Iran is a very naughty boy who needs to be brought into the ways of enlightenment.
In part, at least, this stems from the Current Iranian regime having overthrown the shah who the US had put into power, actually to a fairly large extent as a favour to the British who objected to Iranian PM Mohammad Mosaddegh nationalising the British owned Iranian oil industry. It was a favour with strings attached though, reducing British influence and increasing US influence in Iran (cutting a long story short) .
Former Iranian president, Hassan Rouhani, studied in Scotland for his PhD whilst being a high ranking Iranian official, it’s hard to see being allowed in the US
From a middle Eastern Muslim POV, Iran is the centre of (standard) Shia power and so the Sunni Power base is anti-Iran and that includes Saudi Arabia who is a big US ally. Just to confuse things a little more, there are many Shia muslims in Saudi. Also the Wahhabi interpretation of Sunni Islam has historically been influential in Saudi Arabia, and that is very antagonistic towards the west. Strict Wahhabis believe that all those who don’t practice their form of Islam are heathens and enemies, still the Saudi regime is a close ally of the US and an avowed enemy of the Iranian regime but officially, Saudi is strict Sunni.
(simplified in a vane attempt to achieve some brevity)
The US, and to a lesser extent, other western powers, keep jumping into this mess with both feet and then wonder why it blows up in their face.
Thank you to the responders. Now my brain hurts! (laughs) It’s all so complicated isn’t it? Interesting to read, hope I can remember at least some of it. Will prob have to come back and re-read.
Finally got my Covid jab yesterday at home (thank goodness!) and I suspect that’s interfering somewhat with my cognition on top of my arm having a huge lump around the jab site.