A remarkable speech from a senior rate-setter at the Bank of England lays bare the terrible predicament the UK is in
One of the big battles likely to be fought at Westminster this autumn will be over interest rates. This may seem an odd subject for a political row. Didn’t Gordon Brown remove interest rates from government control more than two decades ago? Isn’t Threadneedle Street the other side of London from the House of Commons? Yes and yes – and yet that hasn’t stopped monetary policy featuring in every economic debate since the 1990s, from the loss of industry to the austerity years. This time around, the worry is over inflation and whether the Bank of England is too relaxed about rising prices.
Last month, a House of Lords committee castigated the bank for its “addiction” to creating money through its £895bn quantitative-easing programme which, it claimed, could push prices up further. MPs on the right of the Conservative party are also starting to worry about inflation and what happens if the bank has to raise interest rates.