Economists and Politicians Criticise BoE’s Persistent Mistakes Amid Rising Costs and Interest Rates
The Bank of England (BoE) is under fire from leading economists and politicians, including former monetary policy committee member, Professor David Blanchflower, for a string of inaccurate forecasts, misjudgements and alleged incompetence.
The central bank’s errors have left millions of Britons on tenterhooks regarding their financial future.
The BoE recently conceded its inaccurate prediction of a UK recession and escalating unemployment. Despite assurances to tackle double-digit inflation, the cost-of-living crisis continues, with bills spiralling uncontrollably.
Concurrently, 1.3 million fixed-rate mortgage holders anticipate an increase in monthly payments when their contracts expire later this year.
Adding fuel to the fire, the BoE has hiked interest rates for the 12th consecutive month, elevating borrowing costs to their highest level in 15 years. The base rate has risen to 4.5 percent from 4.25 percent.
“The interest rate hikes haven’t really done much and the effect is going to come down the road. It’s going to have a big impact on the housing market and plunge the UK economy into recession,” warned Prof Blanchflower.
The BoE also revised its inflation forecast, predicting a decrease to only 5 percent by year’s end, higher than the previous 3.9 percent. This is despite other nations experiencing declining inflation rates.
Critics, including Conservative MP Jacob Rees-Mogg, have derided the Bank’s repeated errors. However, Governor Andrew Bailey maintains that the economy is more resilient than critics suggest and expects inflation to drop rapidly due to falling energy prices. Economists fear that the BoE’s efforts to combat inflation may lead to an overcorrection of the financial landscape.
Institutional and public criticism is rife. Trevor Williams, chair of the Institute of Economic Affairs’ shadow monetary policy committee, criticised the BoE for failing to identify inflationary pressures post-pandemic.
Fran Boait, co-executive director of campaign group Positive Money, argued that the only beneficiaries of rate hikes are banks.
With the financial sector reeling from recent events, including the collapse of Silicon Valley Bank and the rescue of Credit Suisse, it is clear that the BoE’s decisions have far-reaching implications.
As the BoE continues to navigate these economic challenges, its critics demand a more accurate and responsible approach.