Bank investigates inflation report leak

THE BANK of England is investigating market complaints that details of its latest Inflation Report were last Tuesday leaked to the financial markets hours before publication.

The Bank is alerting all the journalists who receive copies of the report in advance that they are ending this practice because 'only journalists have this privilege; and the circumstantial detail reported back to us by the market has persuaded us that there may indeed have been a leak'.

The Bank in effect accused one or more of the journalists with advance access to the report of leaking it to the gilt-edged market. It warned that investigations into the leak would continue.

Under the Criminal Justice Act which came into force on 1 March, insider trading in gilts - government securities - can lead to prosecution for a criminal offence.

The Bank said it would only allow journalists to have advance copies of the report on a lock-up basis in which no communication with the outside world would be allowed until 4pm.

For the past year the Bank has allowed journalists to pick up copies of the report several hours before publication, late in the afternoon of the same day. But it said yesterday that it could not ignore 'allegations of the kind we received, or risk a repetition'.

The Bank said it received several complaints from the gilts market last Tuesday that information relating to the contents of the report 'had been passed to dealers by one or more journalists'.

The Bank of England report said that Kenneth Clarke, Chancellor of the Exchequer, had undermined anti-inflation credibility last February by cutting rates against its advice, boosting fears of future inflation, and perhaps the growth of wages.