Bank of England raises rates to 4% as Iran war fans inflation
The Bank of England on Thursday raised its key interest rate by 0.25 percentage points to 4%, its first hike since August 2023, CNBC and AP report. Policymakers pointed to the nine-month US-Iran war and rising global energy prices; they now expect UK inflation to reach about 5% by mid-2027. Governor Andrew Bailey warned that without real progress toward ending the Middle East conflict, risks to energy prices — and so to inflation — remain to the upside. Read at CNBC →
Diocletian's Edict on Maximum Prices
What happened then
In AD 301 the emperor Diocletian issued the Edict on Maximum Prices, a vast schedule of ceilings for goods, wages and transport across the empire, with harsh penalties for sellers who charged more. Inscriptions of the edict survive from places such as Aezani in Asia Minor.
What caused it
A century of civil war, debased coinage and soaring military costs had produced what modern writers call a third-century inflation crisis. Diocletian blamed greed and speculation; his answer was to freeze prices by law rather than restore the currency alone.
How it was resolved
Enforcement proved patchy. Goods vanished into black markets, shortages worsened, and the edict was effectively abandoned within a few years even as Diocletian's other administrative reforms lasted.
How it turned out
The episode became a textbook case: when war and bad money drive prices up, a government can decree a maximum, but it cannot decree a supply. Later ages kept rediscovering the same hard limit.
What the philosophers say
Bastiat's essay “That Which Is Seen, and That Which Is Not Seen” is a primer in looking past the first, popular effect of a policy. A rate rise is seen as dearer mortgages; what must also be seen is the unseen damage of letting war-driven inflation run — eroded wages, panicked borrowing and a currency people stop trusting. Diocletian chose the opposite shortcut: decree lower prices and punish the seller. Bastiat's habit of mind says ask what disappears when you forbid the symptom. Central bankers raising rates are, at their best, choosing the seen pain now over the unseen wreckage of pretending energy-war inflation can be regulated away.
Sources: Bastiat, That Which Is Seen and That Which Is Not Seen (Wikisource) · Stanford Encyclopedia of Philosophy: Friedrich Hayek (on prices as signals)
Sources: 1911 Encyclopædia Britannica: Edict of Diocletian (Wikisource) · Livius.org: Diocletian's Edict on Maximum Prices (Aezani) · The Conversation: How Roman emperors battled runaway inflation
Further reading: Diocletian and the Roman Recovery by Stephen Williams