Understanding the Bank of England's Pushback on Inflation

Key Highlights :

1. Inflation is running at 10% and the trade union is seeking a wage settlement that at the very least maintains the spending power of their members.

2. The chief economist of the Bank of England says that workers and companies should show restraint and accept that they are worse off as a result of the energy shock.

3. There has been pushback against the Bank and Paul Nowak, the TUC general secretary, said in response to Pill's podcast remarks that workers needed a pay rise not lectures.

4. Julian Jessop, the former chief economist of the Institute of Economic Affairs, said Pill's remarks were "insensitive" and added to the sense that the Bank was "asking households and businesses to control inflation, when that's its job".

5. Stephen King, a senior economic adviser to HSBC bank, puts it well in his excellent and readable new book about the re-emergence of inflation* when he says an independent central bank that fails to deliver price stability is bound to come under greater political scrutiny.

     Central banks are keen to blame the surge in inflation on anyone but central banks, but the truth is that they are responsible for controlling it. In this article, we take a look at the Bank of England's response to the current inflationary environment, their attempts to shift the blame away from their own policies, and the criticism they have received from trade unions and economic experts. We also explore the implications of the Bank's failure to keep inflation in check, and the potential for increased political scrutiny. Finally, we consider the importance of understanding the true causes of inflation and the need for central banks to take responsibility for their actions.

Continue Reading at Source : theguardian