Sir Mark Carney, the former Bank of England Governor, has said the government’s mini-budget tax cuts are “working at some cross-purposes” with monetary policy.
The economic accused Liz Truss and Kwasi Kwarteng of “undercutting” financial institutions, after last week’s mini-budget sent markets into turmoil, and the pound plummeting.
Speaking to the BBC, his comments came after the BofE said it would but back £65bn of UK government bonds in a bid to calm markets, while Kwasi Kwarteng met banking leaders yesterday.
Today, Liz Truss is set to face MPs.
The pound was slightly down on the dollar following the Bank of England’s intervention, at 1.1155.
“Unfortunately having a partial budget, in these circumstances – tough global economy, tough financial market position, working at cross-purposes with the Bank – has led to quite dramatic moves in financial markets,” Sir Mark said.
Speaking on BBC Radio 4’s Today programme on Thursday, he responded to the mini-budget being announced without a forecast from the Office for Budget Responsibility, he said: “I don’t understand why it seems unusual that you actually want to know the numbers in a budget, after all that is what a budget is, and understand the forecasts underpinning those numbers.
“And then make your own judgements about whether those are plausible. It’s important to have it open to independent and dare I say expert scrutiny. That’s the system that’s been put in place.”
On whether the Bank of England should further raise interest rates, he said it was important the Monetary Policy Committee “can take its decision in the right time frame.”
This comes after almost 1,000 mortgage products were withdrawn by banks and lenders on Tuesday and Wednesday amid dears that higher rates would prevent people paying them.
“The message of financial markets is that there is a limit to unfunded spending and unfunded tax cuts.”