Western Daily Press (Saturday)
Bailey denies Bank was too slow to react over inflation
THE governor of the Bank of England Andrew Bailey has hit back against claims he was too slow to act against soaring inflation after the central bank painted a dire outlook for the country’s economy.
Mr Bailey said earlier interest rate rises could have damaged the UK’s economic recovery following the pandemic.
It came after claims from politicians, including Attorney General Suella Braverman, that the Bank was asleep at the wheel and allowed inflation to get out of control.
On Thursday, officials at the Bank warned that households will face a 15-month recession and inflation of more than 13% later this year.
In response, it raised interest rates from 1.25% to 1.75%, the biggest increase for 27 years, in a move which will put further pressure on mortgage holders.
Mr Bailey told BBC Radio 4’s Today programme said he does not believe the Bank acted too slowly and that earlier action could have brought forward a recession.
“We don’t make policy with the benefit of hindsight,” he added.
“I’d challenge anyone sitting here a year, two years ago, to say there will be war on Ukraine and it will have this effect on inflation.”
The Bank had warned that Britons face two years of tumbling household incomes due to the pressure from inflation.
The runaway costs are largely due to the soaring price of energy, as the fallout from Russian President Vladimir Putin’s war against Ukraine forced gas prices skywards.
However, criticism of the Bank’s response to building inflation last year has prompted Conservative leadership candidate Liz Truss to pledge to re-examine the Bank’s mandate to make sure it has a “tight enough focus on the money supply and on inflation”.
The Governor defended the independence of the Bank.
However, he added that he would remain committed to his position even if the next prime minister seeks to make changes to the Bank’s mandate.
“I made a commitment to see the tenure out - it’s an eight-year term,” he said, after being asked whether or not he could quit in response to a shake-up.