Governor admits time was wasted

In his letter to the new Chancellor, Governor Andrew Bailey offers a mea culpa.

The Bank of England’s policymakers delayed interest rate rises last year as they wanted to see the impact of the end of the furlough scheme on unemployment figures.

However, critics have argued that this wasted time and meant the Bank started to tackle inflation later than it should have.

Mr Bailey admits the Monetary Policy Committee has “revisited” key judgments and says that there was only a “very small impact” from the end of furlough.

The Governor also attempts to reassure Mr Kwarteng that the Bank will take more action to tame inflation if it persists.

He hints here that the Bank will tighten policy in response to stronger demand, which could be fuelled by the Chancellor’s plan to boost growth with tax cuts.