Blame game

Chancellor hits out at Bank

Kwasi Kwarteng appears to partly blame the Bank of England for high inflation by arguing that the war in Ukraine is not the only important driver of prices.

The Chancellor says inflation is at its highest level in 40 years in part because of “domestically driven” factors – particularly the UK’S labour market, over which the Bank has influence.

Andrew Bailey, the Governor, suggested earlier this year that 80 per cent of the inflation was caused by events abroad.

Mr Kwarteng also piles more pressure on the Bank to tighten policy more aggressively to stamp out high inflation, even as interest rate increases act as a brake on the economy by pushing up borrowing costs for households and businesses.

The Chancellor is seeking to calm market worries, after investors were concerned during the Tory leadership campaign as candidates including Liz Truss called for a re-examination of the Bank’s mandate after the surge in inflation. Mr Kwarteng suggests he will not oversee an overhaul that threatens the Bank’s credibility.