Lords want BoE to justify attitude on inflation
The United Kingdom’s House of Lords economic affairs committee called on the Bank of England to explain its belief that the current inflation rise is temporary, the Financial Times reported on Friday. According to the latest data from the Office for National Statistics, UK inflation reached 2.5% in June, hitting a high unseen since August 2018. The committee compiled a report warning that, if the bank “does not respond to the inflation threat sufficiently early, it may be substantially more difficult to curb later.”
The committee chair, Lord Michael Forsyth, said the BoE “has become addicted to quantitative easing, using it as the answer to all the country’s economic problems.” The panel’s report warns that “if perceptions continue to grow that the bank is using QE mainly to finance the government’s spending priorities, it could lose credibility destroying its ability to control inflation and maintain financial stability.”
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