The Bank of England governor denied he was to blame for skyrocketing inflation after price increases hit a 40-year high last month.
At a conference in Vienna, Andrew Bailey responded to claims that the central bank’s decision to print billions of pounds during the pandemic and cut interest rates to record lows had served to fuel rapidly rising inflation.
Last week Lord King, who was governor in 2008 when financial markets crashed, said the BoE’s actions during the pandemic helped fuel inflation.
It was not me? Andrew Bailey responded to claims that the Bank of England’s decision to print billions of pounds in the pandemic and cut interest rates to record lows had served to fuel inflation.
But yesterday, Bailey said: ‘What I reject is the argument that, in our response to Covid, the Bank’s Monetary Policy Committee allowed demand to get out of control and thus stoked inflation. The facts simply do not support this.
Instead, Bailey attributed the price rise to the “very tight” labor market, which has been blamed for helping to drive inflation by raising wages as companies have struggled to attract and retain staff amid a shortage. of workers
Bailey has previously attracted criticism for advising people not to ask for big pay rises to help fight inflation, despite earning more than half a million pounds a year through his work as governor.
It also warned that the UK was facing a “very large negative impact” on revenue as a result of the rising cost of imports, particularly energy.
“We are in a period of rapidly rising prices for energy, goods and some food,” he said.
“This is by far the main cause of high inflation and it is painful, especially for the less well off.”
Bailey added that this was expected to “weigh heavily on demand” and did not rule out raising interest rates further to help cool inflation.
“We have raised interest rates four times so far and have made it clear that to bring inflation down to target we are prepared to do so again,” he said.
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