Bank of England ‘still has a lot to learn’ as inflation failures bite, says head of supervisory board
The Bank of England has much to learn from the recent rise in inflation to prepare for future shocks to hit the UK economy, the head of the supervisory board said.
The central bank has faced fierce criticism for failing to bring inflation under control after peaking at 11.1 percent last year — more than five times its target of 2 percent.
The Bank has been frantically raising interest rates in an attempt to bring inflation back under control, and this has pushed up mortgage costs and threatens to push the UK into recession.
Inflation was still stubbornly high in April at 8.7 percent and the official figures will show today where it settled in May.
The Bank will then announce its final decision on interest rates tomorrow, which has been raised from 0.1 percent to 4.5 percent since December 2021.
Blunders: The Bank of England has faced fierce criticism for failing to bring inflation under control after peaking at 11.1% last year – more than five times its target of 2%
It is widely expected to raise rates to at least 4.75 percent tomorrow and well above 5 percent and possibly to 6 percent later this year.
“We think there are lessons to be learned. We need to take a step back and ask ourselves what we can learn,” said David Roberts, Chairman of the Bank’s Court of Directors.
Governor Andrew Bailey hit a similar note last month.
And chief economist Huw Pill has said there were errors in the way the bank made its inflation forecasts.
Roberts told the House of Lords’ Economic Affairs Committee that he had initiated a review of the forecasting process, which Bailey and other top policymakers at the central bank “eagerly agreed to.”
“We’re going to have a lot more shocks that we have to prepare for,” he said.