Bank of England Governor Andrew Bailey brushed off concerns about inflation two years ago, saying it would ‘resolve itself in September’ says BCC boss
Bank of England Governor Andrew Bailey was personally warned two years ago about the threat of escalating inflation by one of Britain’s leading businessmen, but brushed it off.
Shevaun Haviland, Director General of the UK Chambers of Commerce, claims she confronted Mr Bailey after her members warned of rising prices shortly after her appointment in 2021.
But he brushed off her concerns, saying: “I don’t think it’s a problem” and “it will sort itself out in September,” The Mail on Sunday can reveal.
The revelation follows a raft of accusations from across the City and Westminster – including the Bank’s former chief economist and MP Jacob Rees-Mogg – that the Bank was too slow to respond to rising inflation.
In a speech last week, Mr Bailey stressed that there was nothing the Bank could have done to avoid the cost of living crisis.
In a speech last week, Andrew Bailey insisted there was nothing the Bank could have done to avoid the cost of living crisis
But in the summer of 2021, he dismissed indications that inflation was rising rapidly as “temporary” and said it was important “not to overreact.”
Ms Haviland said she confronted Mr Bailey about this issue again after talking to companies.
The Mail of Sunday also learned that the boss of a leading retailer was shocked by Mr Bailey’s insistence around the same time that early signs of price pressures would be a passing problem.
Inflation peaked at 11.1 percent in October last year, but was still 10.1 percent in March this year.
The numbers released this week are expected to fall below double digits for the first time in seven months.
Critics argue that the bank should have raised interest rates much more quickly, as this could help curb inflation. Earlier this month, the Bank raised the base rate to 4.5 percent – the 12th increase in a row.
Shevaun Haviland, Director General of the UK Chambers of Commerce, claims she confronted Mr Bailey after her members warned of rising prices
Ms Haviland said: ‘Pretty soon after I got to our chambers, we said, ‘Our companies are seeing these surprising increases in raw material costs and we’re really concerned about it.’ So I went to talk to Andrew about it, I brought it up in my first meeting.
“He said, ‘I don’t think it’s a problem’ or ‘I think it’s a supply and demand problem’ and by September it will sort itself out.
“So we went back to our members and they said, ‘No, that’s not the case – Shevaun, go back and talk to Andrew’.”
Still, she remains complimentary of Mr. Bailey, who “always listened and was great to work with.”
“I think the challenge, which I’m sure he outlined before, is what levers he has to influence what happens through global supply chains and the war in Ukraine,” she said.
The bank’s former chief economist Andy Haldane said last year that an earlier rate hike “would have saved the need” for the amount of action needed “to keep inflation in check.”
A spokesman for the Bank of England said: “In spring 2021, the Monetary Policy Committee was alert to the risks of rising commodity prices. . . In 2021 we were still recovering from Covid and there were genuine questions about how long this pressure would last.”