Thursday 4 August 2022 10:43 PM Andrew Bailey accused of being asleep at the wheel as inflation set to hit ... trends now
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The Bank of England faced a ferocious backlash tonight after admitting inflation will pass 13 per cent.
Bank Governor Andrew Bailey was forced to deny he had been ‘asleep at the wheel’ as he warned that Britain faced a lengthy recession.
Critics said Bank officials should ‘rue the day’ they decided not to raise interest rates last year. It came as grim economic predictions forced the Bank to raise interest rates by 0.5 percentage points – the largest amount since 1995 – to reach 1.75 per cent.
It is a highly unusual move. While higher rates can help to tame prices, they can also slam the brakes on economic growth. The Bank also revised its expectations for inflation to a peak of 13.3 per cent in October. Just two months ago, it was predicting a maximum of 11 per cent.
Deflation: Bank of England Governor Andrew Bailey denied he had been ‘asleep at the wheel’
The Bank said the red-hot inflation will cause the UK to slump into a drawn-out recession, with output shrinking for 15 months from the final quarter of this year until the end of 2023.
Households will see their real incomes, or how much money they make taking into account rising prices, fall by the largest amount on record, it predicted.
The bleak update deepened the Tory leadership contenders’ bitter debate over the best way to repair the economy.
Rishi Sunak claimed interest rates would reach as high as 7 per cent under rival Liz Truss’s proposals – while she insisted her plan to cut taxes would fuel economic growth.
Miss Truss will look at whether the Bank of England was ‘fit for purpose’ if she became prime minister, an ally said.
Rishi Sunak claimed interest rates would reach as high as 7 per cent under rival Liz Truss’s proposals – while she insisted her plan to cut taxes would fuel economic growth
In other developments:
Experts warned that millions of homeowners are facing a ‘mortgage ticking time-bomb’ as their fixed deals come to an end and rates rise; Banks were again accused of cashing in on rate hikes by being quick to pass on increases to borrowers but dragging their feet when it comes to savings rates; Struggling households face even more frequent energy bill hikes after watchdog Ofgem ruled the price cap should be changed every three months rather than twice a year; It emerged that Chancellor Nadhim Zahawi and his deputy, Chief