In a move that has left City traders reaching for their smelling salts, former President Donald Trump has taken to Truth Social to celebrate the latest uptick in US inflation as a sign of economic strength. The consumer price index rose 3.5 per cent year-on-year in March, defying expectations of a slowdown.
Trump declared it 'beautiful inflation' and credited his own policies, conveniently forgetting that he is neither in office nor standing for election at the moment. Across the Atlantic, the UK Treasury is less enamoured. Officials have warned that the spillover risks to British markets are significant, particularly given the Bank of England's delicate balancing act between taming inflation and avoiding a recession.
Gilt yields have already risen sharply in sympathy with US Treasuries, pushing up borrowing costs for a government that can ill afford it. The spectre of capital flight looms as investors chase higher yields Stateside. One cannot help but recall the Truss-Kwarteng debacle of 2022, when similar fiscal incontinence sent the pound into freefall.
The Treasury's quiet panic is understandable; after all, they have spent years lecturing the private sector on fiscal responsibility while presiding over the highest tax burden since the war. The irony is not lost on this column.
