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Bank of England chief Andrew Bailey to be questioned by MPs on inflation

Bank of England Governor Andrew Bailey will be questioned by MPs over his handling of the economy as inflation threatens to push Britain into recession.

MPs will question Andrew Bailey over his handling of the economy as soaring inflation threatens to push Britain into recession.

In what could be a tricky session for the Governor of the Bank of England, members of the Commons Treasury Committee will question him next week.

The central bank, which has been operationally independent for 25 years, faces growing doubts about its stewardship of the economy after warning that inflation will top 10 percent this year.

Trouble ahead: Andrew Bailey to be questioned by members of the Commons Treasury Committee

Trouble ahead: Andrew Bailey to be questioned by members of the Commons Treasury Committee

The Bank is mandated by parliament to keep inflation at 2 percent and has raised interest rates from 0.1 percent to a 13-year high of 1 percent in a bid to cap prices. But amid runaway inflation and higher borrowing costs, the Bank warned this month that the economy could slip into recession this year.

The increasingly bleak picture has drawn criticism from Conservative MPs who question his handling of the economy and cast doubt on his independence. Foreign Minister Rishi Sunak has also been criticized for raising taxes, further stifling the economic recovery.

Official figures this week showed the economy turned around in March, before April’s harsh tightening of household finances kicked in with a rise in household energy bills and tax hikes. Next week’s figures will show inflation rising from 7 percent in March to 9 percent in April, a rate not seen in 40 years.

MPs from the Treasury committee now called Bailey and three of his colleagues, Lieutenant Governor Dave Ramsden and Monetary Policy Committee members Jonathan Haskel and Michael Saunders, into Parliament on Monday to explain themselves.

The sources said they are likely to be asked about the likelihood of a recession and “cost-of-living increases.” MPs will explore whether the decision to raise interest rates “contributed to the worsening economic outlook.”

Ramsden has said more rate hikes would be needed to rein in inflation despite the threat of recession. “I don’t think we’ve gone far enough yet,” he said.

Conservative MPs have turned against the Bank. Former cabinet minister Liam Fox said he has “consistently underestimated the threat” of rising inflation. “The Bank persisted beyond any rational interpretation of the data to tell us that inflation was transitory … that it would peak at 5 percent,” he said.

The former minister, Robert Jenrick, told the FT: “The Bank missed the opportunity to control inflation last year, arguing that it would be modest and transitory when it was clear to many of us that it would be high and prolonged. We are now in danger of entering a new inflationary era.

“Having acted too little, too late, there is a risk of overcompensation if it pursues significant interest rate increases.”


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