London Daily

Focus on the big picture.

Bank of England accepts it has  'a lot to learn about operating monetary policy in a world of big shocks'

Bank of England accepts it has 'a lot to learn about operating monetary policy in a world of big shocks'

Andrew Bailey accepts some Treasury Committee criticism, explains food inflation and said strikes have not impacted inflation.
The head of the Bank of England has said there are "very big lessons" to learn about how the central bank has dealt with the economic shocks that have resulted in persistent double digit inflation and a cost of living crisis.

Governor Andrew Bailey's comments represent a tone change from the Bank, away from defending actions, such as the pace and timing of interest rate rises, to acknowledging monetary policy has not been perfect.

He faced rigorous questioning on the rate of inflation - which has remained above 10%, more than five times the Bank's 2% target and above their forecasts - from MP members of the Treasury Committee.

The Bank has consistently raised interest rates since December 2021 in an effort to suppress economic growth and dampen inflation as a result.

MPs were critical of the Bank's efforts to bring down inflation, particularly food inflation, which latest figures show stood at 15.7% and which the Bank has described as a "shock".

Some of the criticism was accepted by Mr Bailey.

"I think there is a genuine debate with food for instance, not so much about the shock itself ... but actually about the longevity of the pass through of food prices and what we learned about that, so I think we have a lot to learn about operating monetary policy in a world of big shocks."

Recent events such as the COVID-19 pandemic, Russia's invasion of Ukraine, and the associated significant rise in energy costs, have impacted the economy and led to soaring inflation which has impacted the monetary policy response of the Bank.

Those shocks have been "unprecedented, not just in the last 30 years", Mr Bailey said.

Food inflation has been so high, he said, due to weather events which led to salad vegetable shortages; avian flu; the high cost of sugar and producers dealing with expensive energy bills.

When asked if the months of strikes, taken in a range of industries across the public and private sectors, had added to inflation, Mr Bailey said it hadn't.

"I don't think we've any sense of that at the moment no, though we do watch it carefully", he said.
Newsletter

Related Articles

London Daily
0:00
0:00
Close
Barrow's Sacred Heart Primary School Faces Long-Term Closure
German National Sentenced to Death in Belarus
Elon Musk's Companies Drop CrowdStrike After Global Windows 10 Outage
US Advises India on Russian Ties Amid Geopolitical Shifts
Trump Pledges to End Ukraine Conflict if Reelected
Global IT Outage Unveils Digital Vulnerabilities
Global IT Outage Sparks Questions About Financial Accountability
CrowdStrike Bug Affects 8.5 Million Windows Devices
Flights Resume After Major Microsoft Outage
US Criticizes International Court's Opinion on Israeli Occupation
CrowdStrike Update Causes Global IT Outage Due to Skipped Quality Checks
EU’s Patronizing Attitude Towards Africa Revealed
Netanyahu Denounces World Court Ruling on Israeli Occupation
Adidas Drops Bella Hadid Over Controversy
Global Outage Caused by CrowdStrike Update Impacts Millions
Massive Flight Cancellations Across the U.S. Due to Microsoft Outage
Global Windows Outage Causes Chaos Across Banks, Airlines, and More
Russia Accuses Ukraine of Using Chemical Weapons
UK's Flawed COVID-19 Planning Exposed by Inquiry
Ursula von der Leyen Wins Second Term as European Commission President
Police Officer Injured in Attack in Central Paris
Hulk Hogan absolutely tore it up at the RNC.
Paris is being "cleansed" of migrants and homeless people ahead of the Olympics.
Lamine Yamal arriving at his school after winning the Euros
Campaigners Urge UK Government to Block Shein's London IPO
UK Labour Government's Legislative Agenda
UK Labour Government to Regulate Powerful AI Models
Record Heat Temperatures in Ukraine Amid Power Crisis
UK Government Plans to Remove 92 Hereditary Peers from House of Lords
King Charles III Delivers Labour Government's First King's Speech
Officials Remove 'Disastrous' Label from Liz Truss's Mini-Budget
Keir Starmer Outlines Ambitious Plans for Government
Japan to Allocate $3.3 Billion to Ukraine Using Frozen Russian Assets
EU Parliament Condemns Hungarian PM's Russia Visit
FBI Struggles to Find Motive Behind Trump Shooting Incident
Kremlin Criticizes EU Rejection of Orban’s Ukraine Peace Proposal
Google and Microsoft Now Consume More Power Than Several Large Countries
Secret Service Criticized for Lack of Sniper Protection During Trump Shooting
US Senator Robert Menendez Found Guilty of Corruption
Deep Concerns about Political Violence as US Approaches Election Day
Trump Media Shares Surge Following Re-Election Bid Boost
The gunman who attempted to assassinate Donald Trump Saturday is 20-year-old Thomas Matthew Crooks
Banksy's Influence on Port Talbot's Street Art Scene
Bodies of Two Men Found in Suitcases on Bristol Bridge, 24-Year-Old Arrested
Kate Middleton to Attend Wimbledon Men's Final Amid Cancer Recovery
Russia's Electronic Warfare Neutralizes Western Weapons in Ukraine
Trump Challenges Biden to Debate and Golf Match
Macron Accuses Israeli Minister of Election Interference
US Senator Highlights Weaknesses in Western Military Industry During Ukraine Conflict
George Clooney Urges Biden to Withdraw from Presidential Race
×