Uploaded March 2026 | Updated September 2026, 3 weeks ago
The Bank of England meets on 19 March to decide on interest rates.
Many commentators now say rates cannot fall because war in the Middle East could push up oil and gas prices and increase inflation.
But that argument misunderstands what is actually causing inflation.
If prices are rising because of a global energy shock, raising interest rates will not reduce those prices. Instead, it will increase mortgage costs, reduce investment and push the UK economy closer to recession.
In this video, I explain why imported inflation from oil and gas prices requires a completely different response from the Bank of England.
Not all inflation is the same, and treating it as if it were is simply bad economics.
Take a look at the poll below: youtube.com/post/Ugkxr8w3AzeOYxiT-3ksFYM9Xr_3_BwUfkur
00:00 — War, oil prices and interest rates explained
00:50 — Why markets now expect interest rates to stay high
01:30 — Energy price shocks and inflation risk
02:15 — The key question: what is actually causing inflation?
03:00 — Imported inflation vs domestic overheating
03:40 — What interest rates are supposed to do
04:20 — Why rate rises don’t reduce energy prices
05:00 — The “wage-price spiral” argument examined
05:50 — Weak wages and declining bargaining power
06:30 — What higher interest rates really do to households and businesses
07:05 — The danger of recession from bad policy choices
07:40 — Not all inflation is the same
08:05 — Why the Bank of England risks making the wrong decision
TRANSCRIPT
A transcript for this video is available at: taxresearch.org.uk
IF YOU WANT TO WRITE TO YOUR MP ABOUT ISSUES IN THIS VIDEO
If you want to write a letter to your MP on the issues raised in this blog post, there is a ChatGPT prompt to assist you in doing so, with full instructions, here. taxresearch.org.uk/Blog/2025/06/20/chatgpt-prompt-for-a-letter-to-your-mp
HOW TO SUPPORT US
Please consider donating: ko-fi.com/taxresearch
ABOUT RICHARD MURPHY
Richard Murphy is Emeritus Professor of Accounting Practice at Sheffield University Management School. He is director of Tax Research LLP and the author of the Funding the Future blog. His best-known book is ‘The Joy of Tax’.
This video was edited by Thomas Murphy.
RICHARD MURPHY ON BLUESKY:
https://bsky.app/profile/richardjmurphy.bsky.social
OR
ON MY BLOG: taxresearch.org.uk/Blog
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INTRODUCTION: youtube.com/watch?v=HdHsRPy3060
PLAYLISTS:
The Wealth Series
youtube.com/playlist?list=PLvRueM6wBgobQLeyZYAagFDMjEFTKbhRD
Ecenomics
youtube.com/playlist?list=PLvRueM6wBgob54Gs-fOL-8OAQ-IpduwB4
Britain
youtube.com/playlist?list=PLvRueM6wBgobwTT4ATvJjsf8OO6S7wD10
Tax
youtube.com/playlist?list=PLvRueM6wBgoaMni_12J6ULp3yUJisUZoY
MMT
youtube.com/playlist?list=PLvRueM6wBgoZ6jvRGSW5YXu8qogE6aClX
Money
youtube.com/playlist?list=PLvRueM6wBgoYnLk1c7syTvoIo8bKYUs5m
Climate Change
youtube.com/playlist?list=PLvRueM6wBgob4_wsYaVivWd2WumpPLYwJ
USA
youtube.com/playlist?list=PLvRueM6wBgoYYd3dSyU2Oyl3x7bWJOP7H
Labour
youtube.com/playlist?list=PLvRueM6wBgoa-KhzG-fnjDSg1WROL1zMw
The Trump Administration
youtube.com/playlist?list=PLvRueM6wBgobz41-GLimTho27A3flVWQx
#richardmurphy #richardjmurphy #economy #economics #accountancy #accounting #tax #uktax #ukeconomy #greennewdeal #uk #money #economy #politics #government #tax #labour #health #life #InterestRates #BankOfEngland #OilPrices #EnergyCrisis #InflationExplained #ImportedInflation #EconomicPolicy #UKEconomy #MortgageRates #CostOfLivingCrisis #Geopolitics #EnergyPrices #CentralBankPolicy #RecessionRisk #PoliticalEconomy #FundingTheFuture #RichardMurphy
The Bank of England meets on 19 March to decide on interest rates.
Many commentators now say rates cannot fall because war in the Middle East could push up oil and gas prices and increase inflation.
But that argument misunderstands what is actually causing inflation.
If prices are rising because of a global energy shock, raising interest rates will not reduce those prices. Instead, it will increase mortgage costs, reduce investment and push the UK economy closer to recession.
In this video, I explain why imported inflation from oil and gas prices requires a completely different response from the Bank of England.
Not all inflation is the same, and treating it as if it were is simply bad economics.
Take a look at the poll below: youtube.com/post/Ugkxr8w3AzeOYxiT-3ksFYM9Xr_3_BwUfkur
00:00 — War, oil prices and interest rates explained
00:50 — Why markets now expect interest rates to stay high
01:30 — Energy price shocks and inflation risk
02:15 — The key question: what is actually causing inflation?
03:00 — Imported inflation vs domestic overheating
03:40 — What interest rates are supposed to do
04:20 — Why rate rises don’t reduce energy prices
05:00 — The “wage-price spiral” argument examined
05:50 — Weak wages and declining bargaining power
06:30 — What higher interest rates really do to households and businesses
07:05 — The danger of recession from bad policy choices
07:40 — Not all inflation is the same
08:05 — Why the Bank of England risks making the wrong decision
TRANSCRIPT
A transcript for this video is available at: taxresearch.org.uk
IF YOU WANT TO WRITE TO YOUR MP ABOUT ISSUES IN THIS VIDEO
If you want to write a letter to your MP on the issues raised in this blog post, there is a ChatGPT prompt to assist you in doing so, with full instructions, here. taxresearch.org.uk/Blog/2025/06/20/chatgpt-prompt-for-a-letter-to-your-mp
HOW TO SUPPORT US
Please consider donating: ko-fi.com/taxresearch
ABOUT RICHARD MURPHY
Richard Murphy is Emeritus Professor of Accounting Practice at Sheffield University Management School. He is director of Tax Research LLP and the author of the Funding the Future blog. His best-known book is ‘The Joy of Tax’.
This video was edited by Thomas Murphy.
RICHARD MURPHY ON BLUESKY:
https://bsky.app/profile/richardjmurphy.bsky.social
OR
ON MY BLOG: taxresearch.org.uk/Blog
HIT SUBSCRIBE & GET NOTIFICATIONS
Subscribe and get notified of new videos released.
INTRODUCTION: youtube.com/watch?v=HdHsRPy3060
PLAYLISTS:
The Wealth Series
youtube.com/playlist?list=PLvRueM6wBgobQLeyZYAagFDMjEFTKbhRD
Ecenomics
youtube.com/playlist?list=PLvRueM6wBgob54Gs-fOL-8OAQ-IpduwB4
Britain
youtube.com/playlist?list=PLvRueM6wBgobwTT4ATvJjsf8OO6S7wD10
Tax
youtube.com/playlist?list=PLvRueM6wBgoaMni_12J6ULp3yUJisUZoY
MMT
youtube.com/playlist?list=PLvRueM6wBgoZ6jvRGSW5YXu8qogE6aClX
Money
youtube.com/playlist?list=PLvRueM6wBgoYnLk1c7syTvoIo8bKYUs5m
Climate Change
youtube.com/playlist?list=PLvRueM6wBgob4_wsYaVivWd2WumpPLYwJ
USA
youtube.com/playlist?list=PLvRueM6wBgoYYd3dSyU2Oyl3x7bWJOP7H
Labour
youtube.com/playlist?list=PLvRueM6wBgoa-KhzG-fnjDSg1WROL1zMw
The Trump Administration
youtube.com/playlist?list=PLvRueM6wBgobz41-GLimTho27A3flVWQx
#richardmurphy #richardjmurphy #economy #economics #accountancy #accounting #tax #uktax #ukeconomy #greennewdeal #uk #money #economy #politics #government #tax #labour #health #life #InterestRates #BankOfEngland #OilPrices #EnergyCrisis #InflationExplained #ImportedInflation #EconomicPolicy #UKEconomy #MortgageRates #CostOfLivingCrisis #Geopolitics #EnergyPrices #CentralBankPolicy #RecessionRisk #PoliticalEconomy #FundingTheFuture #RichardMurphy
