The International Monetary Fund urged the United Kingdom to re-evaluate its tax cuts after former Treasury Secretary Lawrence H. Summers expressed his delight at the International Monetary Fund.
What Happened: Summers shared a piece on Tuesday by the Financial Times that reported on the IMF's recommendation against large and untargeted fiscal packages amid rising inflation pressures in many countries, including the U.K.
Glad to see the IMF recognize the gravity of the British situation. While I agree with the Fund's judgement on the inequality of the tax cuts, the only thing that warrants their involvement is the macroeconomic imprudence, Summers tweeted.
The income tax and stamp duty on home purchases were cut last week by the British Chancellor of the Exchequer Kwasi Kwarteng and the business taxes were put off by him.
He said that there is the risk of a vicious cycle in which volatility hurts the fundamentals, which in turn raises volatility.
Summers also challenged the central bank's take on inflation and said that there was something anti-inflationary about unbounded energy subsidies, as well as the suggestions that seem to have come from the Bank of England. Subsidies affect whether energy is paid for directly or indirectly or through taxes, not its ultimate cost, Summers said.
Price Action: The Invesco CurrencyShares British Pound Sterling Trust FXB has lost 8% in a single month.