Top economist says Bank of England’s failure to tackle inflation quickly will worsen cost-of-living crisis
One of Britain’s top economists has accused the Bank of England’s of failing to act quickly enough to stop inflation from worsening the cost-of-living crisis.
Gerard Lyons, a former economic advisor to both Gordon Brown and Boris Johnson, accused Bank of England Governor Andrew Bailey of failing to “nip inflation in the bud” and taking a “complacent attitude” towards rising prices – as he warned the Bank’s failures will worsen the cost-of-living crisis.
In an interview with the Mail on Sunday, Lyons said: “Throughout the last year their inflation forecasts have been poor and wrong. While the initial inflation shock was triggered by higher energy prices and supply shocks, the governor took a complacent attitude to the possible inflation risk.”
The comments come after the Bank of England raised interest rates from 0.25 per cent to 0.5 per cent last week, in a bid to keep a lid on runaway inflation, which is set to hit 7.25 per cent in April, according to the Bank of England’s own figures. As set out by the UK government, the Bank of England is supposed to keep inflation at 2 per cent a year.
Lyons, a chief economist at wealth management firm Netwealth and a non-executive director at Bank of China, said that soaring inflation has fueled “rampant” house prices, meaning young people will struggle to get on the housing ladder.
The economist also accused Bailey of having “misread” the economy and of failing to effectively communicate with markets, as he slammed the Bank of England for letting the “inflation genie out of the bottle.”
In a tweet, Lyons said “The Bank of England has both misread the economy and failed to communicate clearly with the markets over the last year. Now they are forecasting inflation above 7% by April, with this forecast coming into line with my forecast made a few months ago.”
The tweet comes after Lyons predicted inflation would 7 per cent this year, in The Times annual survey of economists last December. The prediction came after the Bank of England said in November that it expected inflation would peak at 5 per cent in April 2022.