ALEX BRUMMER: Bankers pull their punches amid signs the inflation tide may be turning

The enormous danger of the prolonged rise in interest rates on both sides of the Atlantic was that central banks would exaggerate the pain.

Central banks were seriously scarred by their failure to diagnose the onset of major inflation. Printing presses were allowed to run for too long, low interest rates and negative interest rates prevailed.

What may have been misjudged is that an overzealous monetary response to a cost-of-living crisis, largely caused by kinks in the supply chain, would do little to calm prices in the short term.

However, it would be a huge blow to global production, which is already suffering from rising energy costs.

Reality hits home. The US economy had an unexpectedly robust third quarter, with annual growth of 4.9 percent.

Rate freeze: The US Federal Reserve (pictured) has kept the fed funds rate at a range of 5.25% to 5.5%, believing it has done more than enough to curb inflation

Nevertheless, the US central bank, the Federal Reserve, is in a wait-and-see attitude.

Last night it kept its federal funds rate at a range of 5.25 to 5.5 percent, assuming it has done more than enough to curb inflation. The UK economy has also shown resilience in the face of the Bank of England’s attack.

However, there are signs that unless the Bank pauses today, the outcome could be disastrous.

The Free Market Institute for Economic Affairs notes that the money supply is shrinking by 4.1 percent annually, meaning the availability of credit is decreasing. There are fears of a recession.

Worryingly, insolvencies in Britain reached their highest level since the Great Financial Crisis in the nine months to September.

The number of companies on the brink of collapse has increased significantly, says bankruptcy expert Begbies Traynor.

The October Manufacturing Purchasing Managers’ Index showed an improvement, but is still in recession territory at current levels.

There is still life in the old bulldog and it would be insane if the Bank continued to squeeze and destroy production, jobs and tax revenues.

Against all expectations, house prices, as measured by Nationwide, rose in October by the most since March 2022.

On the High Street, Next is defying gravity and raising its profit outlook for the fourth time in six months.

All this at a time when prices are in danger of disappearing, with the exception of fuel prices. Food prices are still rising, but the rate of increase is slowing.

Despite virtually full employment, wages are no longer rising above inflation. Consumer prices are falling, so there’s no point in taking the sledgehammer.

Breathe better

Slow build up, damn it! GSK’s respiratory disease vaccine, arexvy, is well on its way to blockbuster status after posting sales of £700m in the third quarter from a standing start.

Even more satisfying for the UK life sciences is that the success was achieved despite a rival jab from Pfizer. GSK’s treatment has better effectiveness and the rollout through the CVS pharmacy chain is notable.

Stand-alone GSK, developed by CEO Emma Walmsley, is doing well.

Pre-tax profits reached £1.8 billion in the third quarter and are up 46 percent so far this year at £5.7 billion.

The respiratory vaccine could soon be available at a practice or pharmacy near you in Britain. Fast-track approval from the UK medicines agency was granted in July and it is already available privately. Discussions with the NHS are ongoing.

But with the vaccine potentially emptying doctors’ surgeries, emergency departments and beds, the case for a UK rollout is overwhelming.

GSK’s other blockbuster vaccine, Shingrix, reaches a plateau in the US. But a deal with China, which protects a huge population of over-60s, means there will be a lot of income.

One shadow over future prospects is the indigestion lawsuits filed in Delaware courts by 79,000 plaintiffs.

The case will be heard in January. The evidence against GSK is weak, but the outcome is unpredictable.

Terror mission

Until now, America’s war against cryptocurrency terrorism financing has been waged largely in secret.

Hamas’s barbaric attack on Israel changes things. This week, US Deputy Treasury Secretary Wally Adeyemo was in London to push for a coordinated crackdown on the way Hamas is exploiting crypto to evade sanctions.

It worries that as other sources of funding dry up, crypto will become the last refuge.