London Daily

Focus on the big picture.
Wednesday, Jul 02, 2025

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

0:00
0:00
Close
Poland Implements Border Checks Amid Growing Migration Tensions
Political Dispute Escalates Between Trump and Musk
Emirates Airline Expands Market Share with New $20 Million Campaign
Amazon Reaches Milestone with Deployment of One Millionth Robot
US Senate Votes to Remove AI Regulation Moratorium from Domestic Policy Bill
Yulia Putintseva Calls for Spectator Ejection at Wimbledon Over Safety Concerns
Jury Deliberations in Diddy Trial Yield Partial Verdict in Serious Criminal Charges
House Oversight Committee Subpoenas Former Jill Biden Aide Amid Investigation into Alleged Concealment of President Biden's Cognitive Health
King Charles Plans Significant Role for Prince Harry in Coronation
Two Chinese Nationals Arrested for Espionage Activities Against U.S. Navy
Amazon Reaches Major Automation Milestone with Over One Million Robots
Extreme Heat Wave Sweeps Across Europe, Hitting Record Temperatures
Meta Announces Formation of Ambitious AI Unit, Meta Superintelligence Labs
Robots Compete in Football Tournament in China Amid Injuries
Trump Administration Considers Withdrawal of Funding for Hospitals Providing Gender Treatment to Minors
Texas Enacts Law Allowing Gold and Silver Transactions
China Unveils Miniature Insect-Like Surveillance Drone
OpenAI Secures Multimillion-Dollar AI Contracts with Pentagon, India, and Grab
Marc Marquez Claims Victory at Dutch Grand Prix Amidst Family Misfortune
Germany Votes to Suspend Family Reunification for Asylum Seekers
Elon Musk Critiques Senate Budget Proposal Over Job Losses and Strategic Risks
Los Angeles Riots ended with Federal Investigations into Funding
Budapest Pride Parade Draws 200,000 Participants Amid Government Ban
Southern Europe Experiences Extreme Heat
Xiaomi's YU7 SUV Launch Garners Record Pre-Orders Amid Market Challenges
Jeff Bezos and Lauren Sanchez's Lavish Wedding in Venice
Russia Launches Largest Air Assault on Ukraine Since Invasion
Education Secretary Announces Overhaul of Complaints System Amid Rising Parental Grievances
Massive Anti-Government Protests Erupt in Belgrade
Trump Ends Trade Talks with Canada Over Digital Services Tax
UK Government Softens Welfare Reform Plans Amid Labour Party Rebellion
Labour Faces Rebellion Over Disability Benefit Reforms Ahead of Key Vote
Jeff Bezos and Lauren Sánchez Host Lavish Wedding in Venice Amid Protests
Trump Asserts Readiness for Further Strikes on Iran Amid Nuclear Tensions
North Korea to Open New Beach Resort to Boost Tourism Economy
UK Labour Party Faces Internal Tensions Over Welfare Reforms
Andrew Cuomo Hints at Potential November Comeback Amid Democratic Primary Results
Curtis Sliwa Champions His Vision for New York City Amid Rising Crime Concerns
Federal Reserve Proposes Changes to Capital Rule Affecting Major Banks
EU TO HUNGARY: LET THEM PRIDE OR PREP FOR SHADE. ORBÁN TO EU: STAY IN YOUR LANE AND FIX YOUR OWN MESS.
Trump Escalates Criticism of Media Over Iran Strike Coverage
Trump Announces Upcoming US-Iran Meeting Amid Controversial Airstrikes
Trump Moves to Reshape Middle East Following Israel-Iran Conflict
Big Four Accounting Firms Fined in Exam Cheating Scandal
NATO Members Agree to 5% Defense Spending Target by 2035
Australia's Star Casino Secures $195 Million Rescue Package Amid Challenges
UK to Enhance Nuclear Capabilities with Acquisition of F-35A Fighter Jets
Russian Shadow Payments via Cryptocurrency Reach $9 Billion
Explosions Rock Doha as Iranian Missiles Target Qatar
“You Have 12 Hours to Flee”: Israeli Threat Campaign Targets Surviving Iranian Officials
×