#economic-policy

#economic-policy

The war in the Middle East is causing inflation to rise again this year. The decision to hold rates at 3.75% for now is a reasonable place given the situation of the economy and the unpredictability of events in the Middle East.

The Bank of Canada said it was holding its key interest rate at 2.25 per cent on Wednesday. The bank was widely expected to look past the high cost of energy brought on by the war in Iran and hold rates.

Ongoing conflict in the Middle East continues to disrupt global markets and oil prices, adding a persistent layer of uncertainty for UK firms. This geopolitical instability is driving higher cost pressures and intensifying concerns around supply chains and energy security, all of which are critical factors in strategic business decision making.

"Donald Trump's idiotic war with Iran cheered on by Kemi Badenoch and Nigel Farage is making it far more expensive for people to get around. Families are paying more at the pump because of a war they didn't start and don't support."

The orthodoxy across much of the world has been that only markets should decide what things cost, as argued by influential economists like Friedrich Hayek.

"Under President Trump's leadership, we are on a path toward unprecedented economic growth, lasting dollar dominance, and fiscal strength and stability," Treasury Secretary Scott Bessent said in a statement announcing the decision.

The Malaysian government plans to slash the number of foreign workers to encourage local hiring and raise incomes, with significant changes to visa regulations coming in June.