Senior Tory MPs have launched an attack on the Bank of England for “consistently” misjudging the inflation threat.
In a speech last night, former defence secretary Liam Fox called for an investigation into why the central bank “comprehensively underestimated” the risks of surging prices.
Mr Fox said: “It is the duty of central banks to safeguard the value of our money and our savings. The Bank of England persisted beyond any rational interpretation of the data to tell us that inflation was transient.”
Meanwhile, Robert Jenrick, a former Treasury minister, told the Financial Times the Bank had “missed the opportunity to gain control over inflation last year”, adding: “We are now in danger of entering a new inflationary era.”
The comments pile further pressure on Governor Andrew Bailey at a time when households are facing a huge strain on their budgets. The Bank has lifted interest rates to 1pc and expects inflation to top 10pc before the end of the year.
Nuclear power plans may push up energy bills, warns Kwasi Kwarteng
The Government’s plans to ramp up nuclear power may push up energy bills in the short term, Kwasi Kwarteng has admitted.
The Business Secretary said the push to build new nuclear power stations as part of a wider energy strategy may have a “small effect” on bills.
But he told the BBC that nuclear was “back on the table” because the Government sees it as a sustainable energy source, adding that it would provide cheaper power in the long run.
The Government last month unveiled its new energy strategy in an effort to bring down surging prices, reduce reliance on Russian oil and gas and accelerate the shift away from fossil fuels.
Pressure mounts on Bank of England
With the cost-of-living crisis deepening, MPs are starting to turn on the Bank of England.
Liam Fox and Robert Jenrick have both pointed the finger at the Old Lady of Threadneedle Street, which has had operational independence over monetary policy for 25 years.
The attacks will make for uncomfortable reading for Governor Andrew Bailey, who’s set to be grilled by MPs on the Treasury select committee next week over the Bank’s approach to tackling inflation.
It comes a day after Rishi Sunak appointed arch-Brexit critic Dr Swati Dhingra to the Bank’s Monetary Policy Committee – an appointment that also risks sparking a political row.
Read more on this story: Ardent critic of Brexit appointed to key Bank of England role
Bank of England plunged into fresh row
The Bank of England is facing an escalating political row after a top Tory MP attacked the central bank for failing to tackle inflation.
Liam Fox, former defence secretary said the Bank had “consistently” misjudged the danger of soaring prices and called for an investigation into the matter.
He said: “It is the duty of central banks to safeguard the value of our money and our savings. The Bank of England persisted beyond any rational interpretation of the data to tell us that inflation was transient.”
The comments threaten to pit the Tory party against Governor Andrew Bailey as the cost-of-living crisis deepens.
The Bank of England has been forced to aggressively raise interest rates and has warned inflation will top 10pc by the end of the year.
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What happened overnight
Asian equities were mostly up following a tumultuous trading period on Wall Street, which rebounded at the close after investors calmed down about US policies to counter surging inflation. In Asia, Hong Kong, Tokyo, Seoul, Singapore and Sydney opened higher, while Wellington traded in the negatives.
Coming up today
- Corporate: ContourGlobal, Sage Group (interims)
- Economics: Industrial production (EU), Michigan Consumer Sentiment Index (US)