Bank of England in for a grilling

"What was he supposed to do, put interest rates up to 10 or 20%? This inflation is caused by more free money being given away than ever before and the biggest increase in the money supply in history. You can't have your cake and eat it."

"The Bank of England has two main tools to control inflation. One is the Bank Rate, which should have been raised higher, sooner. The other tool is Quantitative Easing/Tightening. The Bank of England has said that once Bank Rate reaches 1%, which it now has, it will start selling bonds. The idea is this should increase the interest rates on bonds, and encourage people to save instead of spend, which should reduce inflation. This should have started already. What are we waiting for?"

"When it comes to the economy and inflation, hindsight is definitely a wonderful thing. However, that being said the Bank of England have been slow to react to what is now looking like out of control inflation. Andrew Bailey is in for one hell of a grilling, but expect all the blame to be put on Covid and Russia."

The Bank of England is in an impossible situation. Inflation post-COVID was always going to be an issue, but a war in Eastern Europe impacting gas and oil supplies, as well as corn shipments, has only added to that. Let's remember that inflation is a comparison of costs between the same items this year as last and we still had a number of restrictions in place through early 2021 limiting our ability to spend and so many prices fell. Enter 2022 when all restrictions are lifted and all that pent up demand is released and we see prices rise, as the supply of goods is still limited by global logistics and manufacturing issues. Would ramping the base rate up earlier have stopped any of that? Or would the Bank have then been under fire for stifling the recovery and putting businesses under? The policymakers at Threadneedle Street are damned if they do and damned if they don't. "Having spent time listening to the Bank of England and members to the Monetary Policy Committee (MPC) speak, though they are targeted to keep inflation at 2%, they are very aware that keeping to target cannot and must not be to the detriment of the wider economy, which is a sensible starting point I feel. It is also surprising, when you see them present their data and talk about how they came to certain decisions, how long a time period the Bank actually looks over. The UK economy is very much like steering an oil tanker; a rash move now may do a lot of harm, but might not actually impact inflation data for 12-18 months, at which point other factors may have brought it back towards target anyway. Whichever way you look at it, I do not envy anyone who sits on the MPC and certainly not at times like these."

"The Bank of England is being used as a scapegoat. The inflationary pressures are not being driven by actions that interest rate rises can control. Instead, they are due to wider geopolitical events. Raising interest rates considerably will simply make matters worse through hitting the pockets of those least able to afford it."