Why Andrew Bailey's comment on prices has caused a stir.

Central bank

Andrew Bailey, the head of the Bank of England, has called on businesses to do their part in combating inflation by avoiding raising their prices. Bailey acknowledged that companies must take into account their expenses when determining pricing, but he urged them to consider the fact that inflation is expected to decrease significantly this year. His direct appeal to businesses was unexpected.

Can we consider it as a blunder?

No, that's not what they call it. Instead, central bankers use the term "moral suasion," which means they try to persuade people to make the right economic decisions using logic, reason, and what's best for the country. However, this approach has a problem called "game theory." It means that if one company keeps their prices low while everyone else raises theirs, they will lose out. Governments and central banks sometimes use moral suasion as their first approach to solve economic issues. In Japan or Sweden, where there's a strong sense of social responsibility, this approach could be effective. However, in more individualistic and self-centered countries like the UK, people tend to ignore or even mock such calls to duty.

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