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Hu Peel, chief economist at the Bank of England, has been embroiled in controversy over how to fix Britain’s living expenses, saying only the Treasury has the resources to help the poorest families.
The remarks in response to a question after a speech in Wales were in response to a political attack on the central bank by members of parliament who complained that monetary policymakers had left inflation out of control.
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Peel said the BOE “needs to be careful about pretending to be a savior for all possible events” and that it “needs to be protected from the political forces that want to do other things.”
Britain’s inflation rate has reached a 40-year high of 9%, which has hit the UK household money at a sharp pace over the decades. Earlier this week, BOE Governor Andrew Bailey said he felt helpless in the face of rising prices, noting that 80% of the increase was coming from forces outside the UK, including the Ukraine war and China’s cowardly lockdown.
Read more: UK inflation shock could be worse than fear, says BOE pill
In recent days, ministers have briefed the press against the BOE, and Business Secretary Quasi Quarteng has offered only warm public support, saying last weekend that the BOE had “done a reasonable job” in focusing on the inflation overshoot. Former BOE Gov. Marvin King and Peel’s predecessor, Andy Haldane, have also been called “wrong” by policymakers.
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Peel stressed that low-income families would suffer the most from rising energy and food costs, but relied on the Treasury to help. Asked what could be done, Peel said: “You should ask my friends and colleagues at the treasury. Ball to their court. The Bank of England does not have the tools to offset the upcoming earnings squeeze. “
In the aftermath of the financial crisis, central banks have become “the only game in town” as governments begin to tighten growth-sapping austerity measures, Peel Cardiff said in an appearance at the Association of Chartered Certified Accountants in Wales.
He said the idea needs to change now.
“In the past the BOE has presented itself somewhat as an answer to many things,” he said. “It simply came to our notice then. The BOE needs to be careful about pretending to be the savior for all possible events. “
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