THE NEW YORKER: With the pound hitting record lows, financial analysts are questioning the competence of Britain’s new government.
Stocks in the U.S. fell again on Monday, dragging the Dow Jones Industrial Average into bear-market territory—since hitting a peak early this year, it has now fallen more than twenty per cent. The Federal Reserve’s determination to stamp out inflation by raising interest rates is spooking investors, and so is the precipitous decline of the British pound in foreign-exchange markets. On Monday, a senior Federal Reserve official, Raphael Bostic, took the rare step of criticizing a foreign ally, saying the British government’s new package of tax cuts, which sparked the sell-off in the pound, “has really increased uncertainty.”
Spare a thought, if you will, for patriotic Brits. Having just buried Queen Elizabeth II, their last remaining link to a time when their schoolbook maps showed great swaths of the earth’s surface colored imperial red, they now face a humiliating currency crisis. In Asian trading early on Monday, the pound sterling hit an all-time low of $1.035 against the U.S. dollar. When trading shifted to Europe, the battered currency rebounded a bit amid speculation that the Bank of England would announce an emergency interest-rate hike to strengthen the pound. On Monday afternoon, the currency’s slump resumed after the Bank of England announced no rate increase but said it may enact one at its next policy meeting, which isn’t until November. » | John Cassidy | Monday, September 26, 2022
