A former U.K. Cabinet member blasted the Bank of England for “consistently” misjudging the threat of inflation, a sign Governor Andrew Bailey will face mounting political pressure to combat the cost of living crisis.

In a speech on Thursday, Liam Fox, a former defense secretary, called for lawmakers to launch an investigation into why the central bank “comprehensively underestimated” the danger, and advised the government to “think about what guidance might be given to the Bank of England on considering and reporting monetary stability.”

“It is the duty of central banks to safeguard the value of our money and our savings,” said Fox. “The Bank of England persisted beyond any rational interpretation of the data to tell us that inflation was transient.”

Bailey is set to face a committee of lawmakers next week at a time when surging consumer prices are squeezing households and forcing the BOE to raise interest rates aggressively. Along with the latest hike on May 5, the governor unveiled forecasts showing inflation will exceed 10% in the fourth quarter.

A group of former central bankers all told the same panel this week that rates will likely need to rise above 3% from the current 1%.

Source:
courtesy of BLOOMBERG

by Simon Kennedy

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