The Bank of England has lessons learned about its management of financial shocks (governor)

The Bank of England (BoE) must learn lessons from how it adapts its monetary policy to successive shocks and the inflation they generate, its governor acknowledged on Tuesday.

The BoE has raised rates 12 times since the end of 2021 – they are currently at 4.5% – but inflation is still above 10% in the UK, although the Bank expects a marked slowdown for May figures due on Wednesday.

I think there are big lessons about how we conduct our monetary policy in the face of big shocks, Governor Andrew Bailey admitted to the British Treasury Parliamentary Committee.

Frequently criticized for the unreliability of his economic forecasts and for having allowed inflation to soar, the governor recalled having acknowledged that rates could have been raised earlier.

The BoE raised its rates at the end of 2021, before the American Federal Reserve or the European Central Bank (ECB). But when inflation was already above its 2% target, it had deemed it desirable to wait for the end of a job aid program linked to Covid-19.

The shock of the end of this government spending has not softened the British labor market, where companies are still struggling to find employees, even if the unemployment rate is starting to rise again.

Mr. Bailey also assured that the committee takes into account in its decisions the part of uncertainty surrounding the economic forecasts.

source site-96