Rees-Mogg Slams Bank of England for Response to Mini-Budget

Jacob Rees-Mogg has slammed the Bank of England for its response to the mini-budget, accusing them of being slow to deal with inflation. While accepting that mistakes were made by the government, he singled out the Bank of England’s monetary policy committee for criticism:

“An independent Bank of England has one task: to keep inflation at 2% – it has manifestly failed at that task. That is not the government, that is the independent Bank of England. 

As a minister we all had to pretend the Bank of England was doing marvelously – well it wasn’t. It’s an institution that has let the country down.”

Rees-Mogg accuses the government of allowing itself to take the blame for the Bank’s failures. Guido is not one to often defend the Old Lady of Threadneedle Street, however they implemented Quantitative Easing with the approval of the Treasury and their political masters. We are reaping the inflationary global consequences of what central bankers the world over sowed…

mdi-timer 11 January 2023 @ 10:25 11 Jan 2023 @ 10:25 mdi-twitter mdi-facebook mdi-whatsapp mdi-telegram mdi-linkedin mdi-email mdi-comment View Comments
Bank of England Predicts Two-Year Recession, Unemployment Forecast to Nearly Double

Aside from the breaking news about the massive interest rate rise, the Bank of England’s report today makes for grim reading. The Monetary Policy Committee (MPC) projects a “prolonged period” of recession, with CPI inflation remaining over 10% in the near term. Even taking into account that economic predictions are about as reliable as a long-term weather forecast, the report makes for truly grim reading…

While inflation is expected to fall “sharply” from mid-2023, GDP is expected to decline by around 0.75% during the second half of 2022, and continue to fall throughout 2023 and the first half of 2024. The BBC says this would be the longest recession since records began in the 1920s, albeit not the deepest…

Perhaps most worrying of all for the government, the MPC expects the unemployment rate to rise to just under 6.5% by Q4 of 2025, up from the current 2022 Q4 projection of 3.7%. In real terms this would leave an extra million working brits on the dole. Perfect timing – right around the last possible election date…

mdi-timer 3 November 2022 @ 12:51 3 Nov 2022 @ 12:51 mdi-twitter mdi-facebook mdi-whatsapp mdi-telegram mdi-linkedin mdi-email mdi-comment View Comments
Bank of England Increases Interest Rates by 0.75%

The Bank of England has confirmed it will increase interest rates by 0.75%, taking them to 3%. A 75 basis-point increase is the largest rise since 1989, bringing the rate to its highest level since 2008. The move comes as the Federal Reserve and ECB also increased rates by 0.75% yesterday and last week respectively. It’s the eighth hike in a row…

mdi-timer 3 November 2022 @ 12:00 3 Nov 2022 @ 12:00 mdi-twitter mdi-facebook mdi-whatsapp mdi-telegram mdi-linkedin mdi-email mdi-comment View Comments
Reeves Claims Still Economical with Truth as Bank Purchases Zero Gilts

The Bank of England has been easing off its interventions in the gilt market, leaving Rachel Reeves’s hyperbolic attack lines exposed for their inaccuracies. Julian Jessop points out the fact the Bank did not have to buy any gilts again today, leaving total purchases stable at £3.66 billion. A tad short of the £65 billion she repeatedly claims. This is a further sign market jitters have been effectively mitigated, far from Labour’s claims of an “economic crash”. As a trained economist and former Bank of England employee, Rachel really must know better. Her sums were out by a factor of 17…

mdi-timer 5 October 2022 @ 16:00 5 Oct 2022 @ 16:00 mdi-twitter mdi-facebook mdi-whatsapp mdi-telegram mdi-linkedin mdi-email mdi-comment View Comments
Reeves Could Learn from Robinson’s £65 Billion Apology

Since the Bank of England announced market operations to purchase gilts last Wednesday, Westminster politicos have been struggling to get their heads round the intricacies of gilt markets. It therefore comes as no surprise to Guido that Nick Robinson was forced into a correction today, after incorrectly repeating the widely tweeted claim that the Bank of England has spent “£65 billion to prop up the markets”:

The claim is somewhat misleading. The Bank of England pledged to buy gilts to the tune of a maximum of £5 billion a day, over two weeks, to assure markets. This means the maximum possible spend was £65 billion, though the actual number will be far smaller. In reality the bank has purchased around £3.66 billion so far, with yesterday’s purchases coming in at just £22 million. The smaller purchase signals the Bank is comfortable with the current state of gilt markets as its credible commitment appears to have paid off. Guido appreciates that the BBC this time took the effort to get the facts right…

Shadow Chancellor Rachel Reeves, who should know better as an ex-Bank of England employee, repeated the same line: “The fact the Bank of England had to step in with a £65 billion bailout with taxpayers money is deeply shameful.” It is not a fact.

Firstly, the market operation will be nowhere near £65 billion. Secondly, it is not money from taxpayers, it is from Treasury reserves, with the purchases even having the potential to make a profit* on resale. So her “taxpayers’ money” claim is also incorrect. Robbo we can excuse, he only has a PPE degree from Oxford. The Shadow Chancellor, a trained economist, is deliberately and wilfully misrepresenting the facts for political advantage…

*A market source says that marked-to-market the Treasury is currently in profit on the trade.

mdi-timer 4 October 2022 @ 10:49 4 Oct 2022 @ 10:49 mdi-twitter mdi-facebook mdi-whatsapp mdi-telegram mdi-linkedin mdi-email mdi-comment View Comments
Bank of England Raises Interest Rates 0.5% to 2.25%

The Bank of England has raised interest rates by 0.5%, bringing rates to a 14-year high of 2.25%. Inflation is now expected to peak at 11% – down from 13% –following the government’s energy bailout. Although the Bank expects it to stay in double digits for several months…

mdi-timer 22 September 2022 @ 12:10 22 Sep 2022 @ 12:10 mdi-twitter mdi-facebook mdi-whatsapp mdi-telegram mdi-linkedin mdi-email mdi-comment View Comments
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