The Bank of England’s inflation rate stunt

He isn’t Canadian. He doesn’t dominate the Davos circuit with platitudes about climate change. And he isn’t constantly warning that the British economy will turn into a cross between Ethiopia and Argentina now that we have left the European Union. In many ways, the current Governor of the Bank of England Andrew Bailey is an upgrade on his high-profile predecessor Mark Carney. And yet, in the most important respect, he is turning out to be very similar. He is constantly threatening to raise interest rates, and then backing off at the last moment.  An increase in interest rate from the ‘emergency’ level of just 0.1 per cent was not quite

The Bank of England’s coronavirus gamble

It’s very interesting, and important, that the Bank of England is encouraging banks to turn half a blind eye to likely coronavirus losses on loans to businesses and mortgage borrowers – in the hope that banks don’t suddenly stop lending for fear future losses will deplete their capital. After the 2008 banking crisis, this is something I never thought I would see, but it’s probably an appropriate measure. Given the sheer number of businesses and mortgage-borrowers in trouble, the damage to the economy would be made much worse if banks stopped or cut lending for prudential reasons. What matters is that the Bank had better be right that the economy and businesses will

Andrew Bailey’s stark warning about the coronavirus ’emergency’

The new Bank of England governor Andrew Bailey has warned that the UK is facing an ‘economy emergency’ and the worst is yet to come. Speaking to Sky News, Bailey said the UK economy needs to brace itself for a ‘very big downturn’. ‘Everything’s on the table that is reasonable,’ he said, referring to the policy tool kit at the BoE’s disposal to help manage any economic crisis in the coming weeks and months. The governor’s warning comes a day after Chancellor Rishi Sunak’s unprecedented £350bn coronavirus stimulus and hours after the pound plummeted below $1.20 – its lowest level against the US dollar since 1985. Investors are abandoning the pound and flocking to the