Jacob Rees-Mogg blasts Bank of England’s ‘credibility’

Lance Forman warns European economy ‘bound to crack’

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Jacob Rees-Mogg has hit back at the Bank of England on ITV’s Peston on Wednesday following Governor Andrew Bailey’s comments on September’s controversial mini-budget. Mr Bailey told the Treasury Committee group of MPs that the fallout had “damaged our reputation internationally” and that it would take “longer to rebuild that reputation than it will do to correct the gilt curve”.

Mr Rees-Mogg was in Government at the time and leapt to defend the Liz Truss Cabinet.

When host Robert Peston asked how he felt about the Governor’s comments he replied: “Motes and beams.

“It seems to me that the Bank of England should take the beam out of its own eye before it takes the mote out of the Government’s eye.”

The Tory MP was referring to the biblical parable of the Mote and the Beam, which warns of the dangers of judging others when one can also be judged by the same standards.

He went on: “The Bank of England was told by Andy Haldane over a year ago that it needed to start increasing interest rates, other people were warning about inflation and the Bank sat on its hands.

“The Bank has then failed to increase interest rates at the same rate as the Federal Reserve, it presided over a 21 percent increase in the money supply from 2019.

“It’s now coming up with explanations for inflation that ignores the increase in the money supply that it presided over.

“So I think if any organisation has a responsibility for inflation at 11 percent when it is set out in statute that it should aim for a target set out by the Government of two percent, so it is nine percent out of its target, it’s the Bank of England that needs to be looking to its credibility rather than trying to blame everybody else.”

Since Kwasi Kwarteng stepped down as Chancellor, his replacement Jeremy Hunt has reversed a number of the decisions made in the mini-budget.

While MPs have criticised the Bank for not raising interest rates quickly enough, Mr Bailey defended the move, saying their aim was to prevent further inflation.

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By increasing interest rates it is hoped inflation can be brought back down to two percent as borrowing will be more expensive and economic activity will be depressed.

The Monetary Policy Committe has claimed that interest rates have also soared due to the impact of Brexit.

Dr Catherine Mann said due to less competition from European markets prices have been pushed up across the board.

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