The Bank Of England Has Stopped Kidding Itself About Inflation – And What Will Stop It

Theodora Lee Joseph

6 months ago1:26 min

The Bank Of England Has Stopped Kidding Itself About Inflation – And What Will Stop It

The Bank of England (BoE) has consistently underestimated UK inflation in the past 18 months. The central bank barely acknowledged that the pandemic would have any impact on prices back in May 2021 (gray line above), and none of its subsequent forecasts in August 2021, November 2021, February 2022, and May 2022 have aged much better.

That might be because the BoE originally claimed inflation was “transitory” – the result of a sharp pandemic-induced slowdown in production and shipping that would pass once everything was up and running again. So in order not to risk the post-pandemic economic recovery, the central bank was reluctant to hike interest rates for no good reason. It was only when it became inarguable in December 2021 that inflation wasn’t just a blip that the BoE started raisi

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