It is a measure of how panicked and confused the governing party is that it is now blaming the Bank of England for the current wave of inflation, which is set to hit double figures by the end of the year and is looking increasingly likely to run out of control. To borrow a phrase, several Tory backbenchers, and even ministers, are turning into “Captain Hindsight” themselves.
There seems to have been a bit of an epidemic of retrospective wisdom in recent days. The governor of the Bank, Andrew Bailey, and his colleagues, listening to the half-baked musings of the Treasury committee, were right to stand their ground and defend themselves. It’s true that inflation is around four times the official target of 2 per cent, but that is not the Bank’s fault. Even to the extent that it might be, it is down to the pressure on the Bank, from the government and the people, to prevent a depression.
Inflation can arise from the negligence and complacency of central banks, and indeed governments. It can also, as now, spring from external and unforeseen shocks. Post-Covid supply issues, and the spike in commodity, food and energy prices, both before and after the Russian invasion of Ukraine, have hit the whole of the world’s economy with a shock.
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