The Bank of England has a lot to learn from the recent surge in inflation in order to prepare for future shocks that will hit Britain’s economy, the head of its oversight board said.
The central bank has faced fierce criticism over its failure to control inflation, having watched it reach a peak of 11.1 per cent last year – more than five times the 2 per cent target.
The Bank is frantically raising interest rates in a bid to bring inflation back under control, and this has pushed up mortgage costs and threatens to tip the UK into recession.
Inflation was still stubbornly high at 8.7 per cent in April, and official figures will today show where it settled in May.
The Bank will then announce its latest decision on interest rates tomorrow, having increased them from 0.1 per cent to 4.5 per cent since December 2021.
Blunders: The Bank of England has faced fierce criticism over its failure to control inflation having watched it reach a peak of 11.1% last year – more than five times the 2% target
It is widely expected to raise rates to at least 4.75 per cent tomorrow and well above 5 per cent and possibly to 6 per cent later this year.
‘We think there are lessons to learn. We need to stand back and ask ourselves what can we learn,’ said David Roberts, chairman of the Bank’s Court of Directors.
Governor Andrew Bailey struck a similar note last month.
And chief economist Huw Pill has said there were errors in the way the Bank made its forecasts for inflation.
Roberts told the Economic Affairs Committee in the House of Lords that he had instigated a review of the forecasting process which had been ‘readily agreed to’ by Bailey and other top policymakers at the central bank.
‘We’ll have lots more shocks that we need to prepare for,’ he said.
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