Andrew: Most analyses of the big picture start with inflation. We know that like us, you have always been sceptical of central banks, so we were intrigued a couple of years ago to see that you thought the US Federal Reserve was broadly right in its inflation outlook: that it would subside rather than become ingrained. Do you feel you got that right?
James: Yes, I think so. US inflation has come down fairly rapidly from its peak. The supply constraints that had underpinned the price rises have eased. Thanks to energy prices there has been a slight uptick in inflation recently, but there has been no evidence of a significant swing towards workers’ bargaining power. So a wage-price spiral fuelling sustained inflation seems unlikely.
The UK is harder to assess in this regard; we have probably had more evidence of wages potentially bolstering prices. Britain has always had a
