What's going on?

The Bank of England (BoE) announced after its meeting on Thursday that it wouldn�t be tweaking its short-term policies, despite the inflation-sized elephant in the room.

What does this mean?

Besides sticking with historic low interest rates, the BoE said it was still planning to buy $1.2 trillion worth of government and corporate bonds by the end of 2021 (tweet this). This, even though inflation rose above the BoE�s target of 2% last month, and even though the central bank�s expecting it to climb as high as 3% � half a percentage point higher than it predicted six weeks ago.

The BoE�s stubbornness is easy to explain: it argued that the British economy is experiencing a fleeting period of strong economic growth, and that this above-target inflation will normalize when the post-lockdown surge settles down. In fact, the central bank won�t move a muscle on policy unless it sees irrefutable evidence that inflation is going to hang around.

Why should I care?

For markets: The BoE didn�t give an inch.�
Investors hadn�t necessarily expected the BoE to commit to raising interest rates, but they had thought it�d at least gesture at raising them sometime soon. That�s why the pound rose and British government bonds fell ahead of the BoE�s announcement: higher rates would make the currency more appealing to savers and international investors, and they�d make future British government bonds more � and current ones less � desirable. But when the BoE refused to even contemplate raising rates, both those moves reversed course.

The bigger picture: Britcoin to the moon.�
The BoE is also one of the many central banks exploring a digital version of its own currency. A government-backed �Britcoin� could bring a host of benefits: it�d be impossible to counterfeit, could help the government spot criminal activity, and would allow for cheap transfers that could boost economic activity. Of course, it could also create all sorts of privacy issues that decentralized cryptocurrencies just don�t have�