Andrew Bailey under fire from Government and City analysts ahead of rate hike
The Governor of the Bank of England, Andrew Bailey, has received criticism from a Cabinet minister and a host of City analysts after a red-hot inflation print spooked the Square Mile.
Inflation is running at 8.7 per cent on annual basis, with price hikes proving stickier than many – including the Governor – had expected.
Bailey has been criticised for downplaying the impact of inflation over the last two years, famously describing it as ‘transient’ in 2021 and insisting it would fall rapidly even after the Russian invasion of Ukraine.
Last night Mark Harper, the Transport Secretary, told Sky News’ Sophy Ridge that Rishi Sunak and the government had seen the danger of higher-for-longer inflation before the Bank.
“Rishi Sunak made it clear when he was Chancellor that he saw inflation as a problem and he saw that early on,” Harper said, in response to a question about whether the Bank moved too slowly at the start of the rate cycle.
Foreign Secretary James Cleverly this morning stopped short of directly criticising the Governor and instead said the Bank was independent.
Jeremy Hunt, the Chancellor, has previously said that the Bank has no choice but to hike rates in order to bring down inflation but yesterday some of his economic advisers told The Times that Andrew Bailey and the Monetary Policy Committee may have wasted some of those rate rises.
“The Bank has tried to be too cute and on frequent occasions when they have raised rates, they have undone the benefits by talking doveishly,” Sushil Wadhwani, a former MPC member and now member of Hunt’s economic council, said.
Others were less measured in their criticism.
Neil Wilson, chief markets analyst at Markets.com, said: “Andrew Bailey and co at the Bank of England have a remit to maintain stable inflation – they have demonstrably failed in this regard. They have a massive headache in the mortgage sector, undeniably, but that ought not to have prevented a more rapid effort to tighten.”
The Monetary Policy Committee will unveil a further rate hike this morning, with the City split on whether it will be a 25 or 50 basis point increase.