Bank of England’ credibility at risk, says former chancellor Lamont
The credibility of the Bank of England is at stake, says former Chancellor Norman Lamont
The Bank of England is once again under fire for its stewardship of the British economy.
With inflation still painfully high and the cost of borrowing skyrocketing, former chancellor Norman Lamont said the central bank’s credibility was “at stake.”
And city grandmaster Bruce Carnegie-Brown, chairman of Lloyd’s of London, said it had “seriously underestimated” the threat of inflation.
The comments came as bank chief economist Huw Pill admitted “weakness” in his forecast record.
The Bank has raised interest rates from 0.1 percent to a 15-year high of 5 percent since December 2021 in a desperate bid to contain inflation, driving up the cost of mortgages.
Concerns: Former Chancellor Norman Lamont (pictured) said central bank credibility is ‘at stake’ as it struggles to come to grips with runaway inflation
But inflation is still more than four times the 2 percent target, at 8.7 percent.
In a debate in Westminster on low growth, Lamont said: ‘I support the independence of the Bank of England, but the credibility of the Bank is at stake today.’
He said the bank refused to halt its quantitative easing program in the summer of 2021, even as prices accelerated.
In November of that year, when inflation was three times higher than target, the Bank was satisfied with the base rate at 0.1 percent.
If the bank wants to regain investor confidence, it must focus hard on this one core objective.
“Regain control [of inflation] is urgent. It’s the best way to support homeowners and essential to get growth back.”
Carnegie-Brown told The CityUK conference: ‘The staying power of inflation has been grossly underestimated by the central bank.’