Can this man save broken economy?
AS WE face a cost-of-living crisis accompanied by rampaging inflation, Andrew Bailey, Governor of the Bank of England, has sat on his hands. As a tutor of economics, I have always understood that the perceived wisdom to bringing inflation under control is that interest rates have to be raised to dampen down demand in the economy. Mr Bailey and the Monetary Policy Committee have been too scared to raise rates, despite it becoming clear inflation was rapidly getting out of control. Raising interest rates also used to mean investment in savings would be encouraged. This part of the economic equation has been shamefully ignored since 2008. There have been 121 Governors of the Bank of England and in my view Andrew Bailey is the worst. It is time for him to make way for a more competent successor.
GRAHAM DAY, Stowmarket, Suffolk.
THE Governor of the Bank of England doesn’t give the impression that the bank has an effective inflation strategy. Andrew Bailey’s economic analysis and solution of increasing interest rates to combat domestic inflation are flawed. We are told economic growth is what we need, and in the next breath that interest rates need to go up to reduce consumer demand, which will reduce market demand for goods and retail prices. Surely these are contradictory. The inflationary spiral we are experiencing is caused by global circumstances beyond the influence of the Bank of England or Parliament. The primary law of supply and demand is coming into play with a vengeance. Inflation is rising throughout the world. The price of everything goes up if demand exceeds supply. Energy prices are a huge inflationary component as they drive up the costs of every business and household. As the cost of living is rising, there is an inevitable response for higher wages, which in itself is inflationary. The big domestic inflationary items are food, energy and used cars. The world’s economies are interlinked and the drivers of British inflation are primarily broken international economics. I don’t see how increasing interest on commercial borrowing and mortgages will make any difference to the global situation. I doubt the Bank of England or the next Chancellor will have much ability to reduce UK or global inflation. For that to happen, we need the war in Ukraine to cease, energy markets to settle, China to return to normal trading and global markets in goods and commodities to resume. Tackling global insecurity is the only way to address inflation. We stand zero chance of doing it on our own. The Foreign Office, UN and World Trade Organization may offer more solutions. The fact is that global inflation is going to be with us for a long time so expect political instability in Britain, Europe and worldwide.
LES SPENCER, Wirral, Merseyside.
IT’S unfair to blame the monetary problems on Andrew Bailey. His predecessor Mark Carney should have raised interest rates long before Covid. I thoroughly endorse the Bank of England fixing the interest rate independently of the Government. That was about the only positive thing Gordon Brown achieved. Let’s stop the blame game, rally round and have faith in the governor of the Bank of England. JACQUELINE DERING, Corsham, Wilts.