Article for the Independent on the Bank of England

The debate over mortgage rates and the high rate of inflation is made difficult by the general view that the Bank of England is independent. This discourages politicians and media from debating their actions and thoughts, and impedes government action.

Constitutionally this is incorrect. The Bank does have the independent power to fix Bank rate following consideration by its Monetary Policy Committee. It is set a target of getting inflation to around 2% a year, a target last revised by Gordon Brown who changed it. I am not proposing they should lose that power. Otherwise it is deeply involved with the government.

The Bank is 100% owned by the state. The government of the day chooses the Governor. The Governor reports to the Treasury Committee of both Houses of Parliament, where he is subject to scrutiny over the work of the Bank. The government bails it out if it loses too much.

The main agent of monetary policy since 2008 has been the Bank both greatly increasing its balance sheet then contracting it. As it expands it buys bonds at ever higher prices, driving interest rates down. As it contracts it sells bonds at losses  driving rates higher . The Bank’s decision to make a large sale of bonds just before the Kwarteng budget along with the rate rise pushed bond prices down. This was compounded by the difficulties of LDI funds owned by pension funds having to sell to cover the calls as the market fell. The Bank’s decision to reverse the sales policy and buy some bonds again rallied the markets, showing how much control the Bank has over it.

This policy is a dual control policy. The Chancellor signs off on the bond programmes. The Treasury provides a full guarantee to the Bank against losses on the bonds. The Bank says it acts as an Agent of the Treasury when doing this.

The Bank overdid the bond buying in 2021. I supported its £300 bn to see  us through lockdowns but thought the subsequent additional  £150bn was risky, likely to bring on inflation. Clearly the bond buying created an asset price inflation, boosting bond prices and in turn shares and properties as the people and firms who sold the bonds to the Bank reinvested their money. In due course money got into wider circulation, and the money the government gave to people and companies based on ultra cheap state borrowing also helped stoke inflation.

Supply was constrained by the after effects of lockdown, by changes in the labour market and by world disruptions brought on by the Ukraine war. Too much money was soon chasing too few goods, scarce energy and food. An inflation set in, leading understandably to people wanting pay rises to limit the damage to their spending power.

The Bank has now said it will review how it forecasts inflation and how it runs its models and makes its decisions on rates. That is a necessary task, as its models gave very wrong indications saying inflation would stay at 2% and then saying higher inflation would be transitory.

The Bank also needs to take an interest in money and credit. It needs to look at the way expanding its balance sheet is inflationary and contracting it too fast may produce a recession. It should ask itself why China has inflation of 0.2% , Switzerland 2.2% and Japan 2.7% when they all import substantial amounts of energy. Their Central Banks followed different policies when dealing with covid and Ukraine.




  1. Mike Wilson
    June 23, 2023

    Their Central Banks followed different policies when dealing with covid and Ukraine.

    What policies did they follow?

    Reply China had a target for growth in money and no QE. Japan followed its 10 year yield curve control policy. Swiss CB did not do QE.

    1. Mike Wilson
      June 23, 2023

      Reply to reply:

      Where did China, Japan and Switzerland find the money to respond to Covid? Presumably they had lockdowns, track and trace and vaccine programmes?

    2. Iain Moore
      June 23, 2023


  2. Mike Wilson
    June 23, 2023

    You say that since 2008 the BOE buys bonds to get interest rates down and sells them to get interest rates up … but it SETS interest rates via the base rate. They moved base rate up yesterday and rates for borrowers will go up immediately and rates for savers will go up (a bit less, no doubt) after a delay (while the lovely bankers profiteer for a while). So, the BOE buys bonds with made up money to basically get money into the economy. The bondholders who held the bonds do what with the money – why they buy property and other assets and inflate the prices. Property prices go up so the BOE lowers the base rate to keep the housing market going. BUT, government makes sure that house prices are not featured in any Cost of Living index.

    Young people are thus suckered in to buying a home with a massive mortgage at dirt cheap interest rates. Now, as interest rates rise to normal historical levels, anyone who has bought in the last 10 to 15 years is screwed.

    The idea that the BOE is independent is fanciful nonsense. How can it be when its actions are underwritten by government. The people involved in the QE and interest rate farce since 2008 should be prosecuted for their incompetence – just as councillors can be if they waste public money.

    Reply They buy and sell bonds to influence longer term borrowing rates. They only set or fix the overnight or short rate.

    1. Mike Wilson
      June 23, 2023

      Reply to reply:

      But they have only been doing this since 2008. Why ‘now’ and not for the several hundred years the BOE has been around?

      Could it be because of the remorseless increase in the national debt?

    2. Peter
      June 23, 2023

      Meanwhile, I see from newspapers that ‘Question Time’ on BBC yesterday was about Brexit and, for the first time ever, it featured a Brexit-supporting audience. I don’t have a TV licence so did not see the show itself.

      Unsurprisingly, the ever present Alistair Campbell was on the panel and tried to the tell the audience it had been lied to. Clips also showed Sir John Redwood in a smart light blue suit, though his contribution to the debate was not featured.

      I suppose it’s all part of the long term plan to reverse Brexit.

      1. Mark B
        June 24, 2023

        You can usually find it on YouTube

        1. Shirley+M
          June 24, 2023

          I’m watching now. They mention the bad trade deal between UK & EU, but not the reason, ie. remainer sabotage via the Benn Act. Hopefully someone will mention it later.

    3. Javelin
      June 23, 2023

      Bank of England is like the BBC.

      There is no downside to their actions. They can’t go bankrupt.

    4. Wepham
      June 23, 2023

      Mike, please don’t lef Conservatives like J Redwood distract you from the truth – our economy is in a mess but the fault lies entirely with the Conservatives, not any bank

      1. Lynn Atkinson
        June 23, 2023

        You are a bigot who is not interested in the truth.

      2. Mike Wilson
        June 23, 2023

        Mike, please don’t lef Conservatives like J Redwood distract you from the truth

        Oh, don’t worry. I know exactly where the blame lies. Without going back too far … Major, Blair, Brown, Cameron, May, Johnson, Sunak plus their respective chancellors plus all MPs plus most of the Lords.

        Nobody else is to blame. The government should control the civil service and the laughably independent BOE.

        It is high time a debt to GDP ratio was set in stone i.e. made illegal to exceed. The debt clock is ticking. 3 trillion within two years. In 2010 Labour said ‘sorry, there’s no money left’ as a joke because, of course, it is a joke to them – with their guaranteed jobs and pensions. What note will the Tories leave? ‘Not only is there no money but the country is bankrupt and owes 3 million, million pounds.

        It will be good to see the Tories into opposition where they can do no more harm.

      3. Mickey Taking
        June 23, 2023

        not us, Gov!

    5. Denis+Cooper
      June 23, 2023

      The Bank buys up government bonds from the market so the government can sell new bonds into the market.

      I thought we sussed this out back in 2009:

      “Several people have reminded me that the government and Bank are going round in circles. They have sold £3.5 billion of 2015 stock, and bought back £3.5 billion of stock with maturities in the range 2014-18. They did the first to fully fund their spending. They did the second as part of their quantitative easing policy.”

      And for example one of my own comments three weeks later, here:

      “In the short term, borrowing becomes much less of a problem if the government can arrange to borrow newly created money from the central bank, and maybe the longer term problem of paying it back can also be circumvented.

      To recap on last week’s turn of the “money-go-round”:

      New money created by Bank of England, used to buy existing gilts from private sector investors: £6.5 billion.

      Money borrowed by Treasury from private sector investors, by selling them new issues of gilts: £4.5 billion.

      These are the running totals for the Bank’s purchases of gilts, in millions:

      12 Mar – £2000
      19 Mar – £6992
      26 Mar – £12993
      02 Apr – £18992
      09 Apr – £24992
      16 Apr – £31495

      and today it plans to spend another £3.5 billion of newly created money buying up previous issues of gilts, and some more tomorrow:

      Ultimately, the Bank’s entire portfolio of gilts may be quietly transferred back to their issuer, the Treasury’s Debt Management Office, at no charge, where they can be cancelled.

      We’re still awaiting George Osborne’s condemnation of this outrageous scam.”

      (I was wrong about the Bank possibly just giving the gilts back, the Treasury would have to pay for them.)

  3. Michelle
    June 23, 2023

    Very good article Sir John, explaining a complicated issue in relatively simple terms.
    I wonder if a long term solution and not quick fixes papering over cracks, would be to actually appoint someone at the BofE who knows what they are doing?
    So many long term solutions seem to lie in the long grass.

    1. Cuibono
      June 23, 2023

      Oh yes!
      Yesterday my husband ( who isn’t thick) exclaimed that he thought he at last understood bonds thanks to a JR article.
      I do think he would have made a very good teacher when things were still sane and had other opportunities not presented.

      1. Mike Wilson
        June 23, 2023

        I’ve had a book for many years called ‘Investment Made Easy’ by Jim Slater. It covers many aspects of investment and is very clearly written and easy to understand. If you want to know everything about bonds (and corporate bonds and shares and preference shares and everything else to do with money), it is well worth the £3.49 you can get it for on Amazon.

        1. Cuibono
          June 23, 2023

          Thanks very much. Good tip.
          I think my husband was saying that JR’s style is particularly clear. Even I understand a bit more about economics and finance than I did before following this diary.

        2. Mickey Taking
          June 23, 2023

          gosh thats a memory jogger – Slater Walker… Jim a master asset stripper?

  4. Mark B
    June 23, 2023

    Good morning.

    The BoE is independent in as far as its remit (set by the government) allows. Akin to individuals and companies. All have independent action as agreements, rules, regulations and the law allows. The question for me is, responsibility and liability. Who ultimately is responsible and Liable and, do they get a say in what happens ? To me the answer is, no as it is the taxpayer who is ultimately responsible and, therefore, liable, which is indeed the case ! If the taxpayer is not responsible how therefore can they be liable ? But we are. The scandal is, we are neither informed or allowed to decide on matters that affect us. We rely on people in the government and parliament to act for and on our behalf. It is there that I see the failing in so far as the aforementioned are not acting our best interests.

    Everyone seems to be playing pass the parcel with knowing that they are not the once who are both responsible and liable for the contents, with those who are not allowed to comment on the actions of the game.

    This is totally unfair.

  5. Bloke
    June 23, 2023

    The Bank of England’s so-called ‘independence’ is stitched up to the Treasury like a frozen kipper. In the heat of inflation kippers fry and burn beyond saving.

  6. Cuibono
    June 23, 2023

    Basically they should not have done what they did.
    There was no need.
    They have tanked us by design or through utter crass stupidity.
    They have changed the feel and nature of the country and the behaviour of its people.
    Their devout and well-meaning ancestors/founders must be turning in their graves, churned up and built over or not.

    A bank that calls for recession. Is that normal?

    1. glen cullen
      June 23, 2023

      Who’s waging the BoE tail, the timing again is suspicious, like a kipper destroying the economy while Liz was PM

      1. Cuibono
        June 23, 2023

        Kippers and Wippers?
        Or UKIP member?
        More war and defenestrations to come?
        This time from capitalism to feudalism rather than the opposite?

        Blinking HAL making decisions again ..not letting me post.
        AI tyranny.

    2. Lynn Atkinson
      June 23, 2023

      They have failed to induce the recession. Now they have to ‘talk a recession up’. They have pulled the levers of power and nothing happened. They are in a panic. Do they really think they can ‘control’ a recession?
      In France and Germany food prices have increased by at least 15% but the German and French people now spend 15% less on food. Are they living in bread? Do the ‘leaders’ feel secure?

  7. Mickey Taking
    June 23, 2023

    It often seems the decisions are made by someone on a placement, which is then over-corrected later.

  8. Donna
    June 23, 2023

    “The government bails it out if it loses too much.”

    The Government has no money; it has OURS (or it borrows money in OUR name). The Government doesn’t bail out the Bank of England ….. it makes taxpayers bail it out. Just as it made taxpayers bail out the commercial banks in 2007/8.

    The Truss/Kwarteng Government was destabilised by the BoE’s bond selling just before the Financial Statement was given by Kwarteng. The IMF effectively sacked Kwarteng and CON MPs then effectively sacked Truss (with no reference to the electorate, either within the Conservative Party or the UK as a whole.

    According to Sir John, the Chancellor (Mr Kwarteng?) signs off on the BoE’s Bond programme. Was that Kwarteng or was it the previous Chancellor (goodness knows who that was, since the Government was in chaos) who did it?

    If it wasn’t Kwarteng who signed it off, it would be VERY interesting to know if he and Truss were briefed by Bailey on the Bond-selling programme ….. or whether they were, effectively, allowed to walk into a trap which had been set for them.

    I suspect that was exactly what happened.

    Reply Mr Sunak signed off on £450 bn of bond buying with full Treasury guarantee. Kwarteng should have told the Governorv not to start selling the bonds on the eve of his budget. As he was paying the losses he could have stopped them. Kwarteng told the media he had many talks with the Governor.

    1. Donna
      June 23, 2023

      Thank you for the reply Sir John.

      Having talks with Bailey doesn’t necessarily mean Bailey made the Bond-selling programme clear, or the likely consequences. As we are all well aware when dealing with senior Public Sector officials, if you don’t ask the right question you won’t get the information you want/need. And even if you do ask the right question, you might not get a transparent answer as every response Sir John gets to his Questions to Ministers demonstrates.

      So basically, we have Sunak to thank for the policy of selling Bonds at a substantial loss – on top of his authorisation for massive money-printing between 2020-2022, which has directly caused the current inflation.

      Yet CON MPs thought that record of abject incompetence qualified for him to become First Lord of the Treasury ….. and expand his incompetence into other policy areas.

      I hope they have many years to review that decision when they pay with their Seats in 2024.

    2. Mark B
      June 23, 2023

      Reply to reply

      Thank you Sir John for that wonderful insight.

      1. Stred
        June 23, 2023

        Spaffer Sunak strikes again.

    3. agricola
      June 23, 2023

      Deply to reply .
      I prefer stitchup,possibly at the behest of the IMF and the Globalist Tendency and engineered by Sunak, the Treasury,and Bank of England to subvert democracy and oust Kwarteng and Truss in a vert english coupe. All because they were intent on creating an outgoing entrepreneurial low tax economy along the lines you have been suggesting in company with many independent economic voices. Now tell me that outside democracy as we know it and Parliament that there is no outside and effective force being applied to the way our country is run. This is not conspiracy theory, there is too much real evidence.

  9. Cuibono
    June 23, 2023

    Anyway I still say that when a company/ business starts to focus on things other than it’s core remit ..
    Then it is not doing its job.
    Wokery may be highly diverting.
    But at the BoE they should be poring over large ledgers 9 to 5 and…
    Getting their sums right!

  10. Philip P.
    June 23, 2023

    SJR, your article implies that when the BoE bought £300m in government bonds (i.e. created money), that was not inflationary: it was only the extra £150m that was inflationary. I struggle to understand why that should be so.

  11. Sakara Gold
    June 23, 2023

    Doubtless, the BoE should have jumped on this much earlier – but we should place the blame for the origin of the current intractable inflation where it actually lies, with the 2021 decision by the fossil fuel majors to quadruple the price of gas and more than double the wholesale price of oil. Their claim that the increase in demand post pandemic followed by the sanctions on Russia caused the price rise is entirely spurious, as the US responded by ramping up production of domestic gas and oil – and so increased it’s market share. The higher input costs on many UK firms are causing the current wage/price spiral.

    The right response by the government should have been to impose a really painful windfall profits tax on big oil’s resulting excessive profits and to use the money raised to reduce the public’s energy bills. Their response was to place a much larger windfall tax on our renewable energy producers, forcing up the price of the cheapest form of energy available to us and changing the economics of charging EV’s in favour of ICE vehicles.

  12. Roy Grainger
    June 23, 2023

    One peculiar thing about the way the BoE sets interest rates is that they have a vote on it as if somehow a “consensus” position will be best. It’s like 17th century scientists having a vote on whether the sun goes round the earth. It shows that whatever data and models are available to the BoE are close to worthless because these votes are rarely unanimous – for example yesterday two members voted to hold rates fixed whereas the Bailey camp voted for a big 0.5% increase. Any process which can come to two such entirely different conclusions is obviously flawed.

    In the absence of good models we need to introduce some jeopardy into proceedings to weed out the bad guessers. As it is agreed that the BoE held rates at zero for too long any MPC member who consistently voted for that policy should be removed from the panel and replaced by another randomly chosen economist from a long list of potential candidates. Then over time the ability of the panel should improve. If this means Bailey himself is removed so much the better.

  13. Nigl
    June 23, 2023

    And I see now the government after refusing to help mortgage holders is pushing the problem onto the Banks in effect saying shareholders, ie you and me and our pension funds, should cough up.

    So in reality another tax. Actually they and the BOE caused it albeit Bailey blaming everyone but himself, so they should sort it and key players sacked.

    Can your lot stoop any lower, Sir JR?

    1. Donna
      June 23, 2023

      According to Richard Tice this morning, Bailey can’t be sacked. He’s been appointed for his full term with no means of sacking him.

      It’s up to the electorate to sack Sunak (who is the other chief culprit) and Hunt – and I don’t doubt for one minute that’s exactly what they’ll do.

  14. Magelec
    June 23, 2023

    Interest rates have been increased to try and save Sunak’s skin as he has promised to halve inflation by the year end.

  15. Shirley+M
    June 23, 2023

    Let us see what this government is doing to the UK …

    1 Mass immigration: all of those immigrants are given priority over housing, employment, and everything else. This turns the indigenous into second class citizens to destroy the cohesion and the indigenous pride of country. The illegal immigrants don’t want to work, or fight, to help improve their home country, so why would they do it for the UK? Many illegals (and approved immigrants) come for criminal opportunities.
    2 Destruction of national businesses: via the religion of net zero and high taxes.
    3 Enforcing poverty: via high living costs and taxes.
    4 Destruction of freedom: via net zero and discouragement of travel.
    5 Destruction of health: due to incompetent and overwhelmed NHS. Again, non-working illegals take priority!

    The electorate didn’t vote for any of these things. Who on earth (apart from dictatorial politicians) would vote to destroy their own country and economy???????????

    1. glen cullen
      June 23, 2023

      ‘’ (viii) We shall take firm action against illegal immigrants and overstayers and help those immigrants who genuinely wish to leave this country.. ‘’ Tory manifesto 1979
      Its an old story

  16. Iain Moore
    June 23, 2023

    The decisions coming from the MPC are unlikely to get any better with their new member Megan Greene, card carrying member of the Democrat party, whose views about Brexit was… “the most damaging blow ever inflicted on the liberal democratic international order”…..which not only tells us about her dislike of Brexit, but also that she is a paid up member to the WEF and that globalist agenda, and if that is not enough she is a Net Zero zealot wanting to create..’ preferential interest rates to help speed up the push for net zero’. In other words a walking talking disaster. What was Hunt thinking about recommending her to join the MPC?

  17. majorfrustration
    June 23, 2023

    Surely the simple truth is that the people in Government and at the BoE are just not up to the job

    1. glen cullen
      June 23, 2023

      With the myriad of monetary & fiscal tools at their deposal to reduce inflation, Hunt and the BoE chose to increase the rate of interest …its strange that not one person on this diary agrees with that decision

  18. agricola
    June 23, 2023

    The BoE’s only instrument of control of the economy is the cost of money. It is a blunt and partial instrument. It largely effects those who are buying their homes, about 30% of the population. This is counterproductive as it is something a Conservative government supposedly wishes to encourage. It affects those who live on credit which is perhaps no bad thing. Keep the car for two more years.
    The most inflationary elephant in the room is government itself. They spend money over and above the tax take by printing it and then giving it a description QE that suggests a constipation remedy. The BoE could refuse this facility to the government, a true test of its independence. I would suggest that government has exceeded its credit rating by maximising on tax and creating debt obligations larger than GDP. Drastic reversal of government spending would be a good first step followed by the removal of tax burdens from individuals and companies that create wealth. Wealth creation is in chains, until those chains are shattered we will continue to drift while being entertained by vacuous speeches from our PM and Chancellor.

    1. glen cullen
      June 23, 2023

      ‘’ Any future government which sets out honestly to reduce inflation and taxation will have to make substantial economies’’ Tory manifesto 1979

  19. Ian B
    June 23, 2023

    All the blunders and mistakes that is emanating from the entities ‘managed’ by this Conservative Government cost every UK taxpayer a fortune. The loses at the BoE – taxpayer. Then we have inflation, the Government has just increased taxes on the UK by 31%, are they saying prices will ‘not’ rise as a consequence? Then there is cack-handed personal tax increase through personal allowances, are they saying that tax burden doesn’t heap pressure pay therefore inflation?

    ‘Rishi Sunak: I’d love to make tax cuts, but it’s irresponsible’ – Instead he increases them but does see they cause inflation. Isn’t it him increasing taxes that is irresponsible and a contradiction? The Sound-Bite Government in all its glory

    If this Conservative Government was to get a grip on its own expenditure plans, manage its own departments instead of exponential growth, step back from import only policy, its exorbitant tax on energy – its a massive list of Conservative Government prolific expenditure that has them demanding more and more tax. They are the cause of the bulk of UK inflation by their refusal to ‘manage’

    1. Ian B
      June 23, 2023

      Ian B – “Andrew Bailey blames high wages for causing inflation” and who is putting pressure on wage increases? Yup – this Conservative Government with their ever greater demand for more tax money for them to give away. Is Andrew Bailey saying all his loses that the taxpayer funds isn’t feeding into pay demands?

      The dummies still dont get it, as was said by those more in control it is the ‘economy stupid’

  20. Cuibono
    June 23, 2023

    Here’s a riddle…
    If there is a wave of house repossessions resulting from the BoE’s interest rate rises.
    ( On top of all the other changes that have screwed landlords)….
    Will the govt. be putting those who have lost their homes into 4**** hotels? 🤔

    1. Mark B
      June 24, 2023

      You can find the answer to your question when if you were to look around Britain inner city streets, doorways etc.

  21. Peter Wood
    June 23, 2023

    We’re in this mess because we’ve had too many ministers with little or no experience of their brief. Mr Sunak may have been a golden boy at Goldman’s, but how much responsibility did he really have. Everyone needs to be a ‘bag carrier’ for a period in their life. If mr. Sunak was so brilliant at monetary policy, did he not know it would cause inflation, and how did he plan to unwind Treasury bond sales at the appropriate time? Seems not to have occurred to him.

  22. Sakara Gold
    June 23, 2023

    Yesterday, being close to the midsummer solstice, I took a drive to Stonehenge in Wiltshire. English Heritage have built a new visitor centre about a mile from the stones, with a massive car park, museum and cafe. I was astounded at being charged the princely sum of £26 for entry, though this did include a shuttle bus from the visitor centre to the monument and entry into the museum. The cafe was charging £2.85 for a cup of tea; a cheese and tomato sandwich was £5.95

    Stonehenge is a wonderful example of Neolithic British engineering and many tourists had taken the trouble to visit – while I was there, about 750 an hour. The monument is open for 8 hours, that is nearly £20,000 a day or £7million a year and is clearly a cash cow for English Heritage. As I sat on the grass looking at the stones and watching a group of “Druids” conducting a ceremony inside the circle – whilst the rest of us were kept behind a rope barrier guarded by “security” – I wondered how many of those struggling with their rent or mortgage payments would be able to do the same

    1. Lester_Cynic
      June 23, 2023


      That’s why I unsubscribed from English Heritage

    2. Donna
      June 24, 2023

      Meanwhile you can visit the stone circle at Avebury, plus Silbury Hill and West Kennett Longbarrow for free. Plus an hour or so wandering around Marlborough, which is a lovely town, and then a couple of miles down the road is Savernake Forest, also free.

      Stonehenge is a massive rip-off.

      1. Sakara Gold
        June 24, 2023

        Hi Donna – yes, i have been to Avebury and Silbury, the largest human-made hill in Europe. Unfortunately Silbury Hill is fenced off and the public cannot gain access, but it is a spectacular sight from the road. Marlborough is indeed a very English town with some lovely old buildings

        This country is replete with rip-offs, the worst of which is high taxation, as our kind host frequently points out

  23. Denis+Cooper
    June 23, 2023

    “It is set a target of getting inflation to around 2% a year, a target last revised by Gordon Brown who changed it.”

    At one time the Bank and Chancellor were committed to shadowing the German Mark, and that lead to disaster:

    and subsequently “monetary policy switched to inflation targeting”, which is now repeating the same mistake.

    To repeat what I said last August, and still believe now:

    “My mind is going back thirty years to the ERM crisis. Then the stupid decision had been to lock sterling against the German mark, come what may. Now it seems the stupid decision is to keep to the 2% inflation target, come what may, even if the UK is importing inflation at levels which are much higher than that and completely beyond the control of the UK monetary and fiscal authorities. During Black Wednesday, September 16 1992, the Bank announced that the base interest rate would be increased to 15% to try to stem the flight from sterling. Luckily that did not work and by the evening we were freed from the ERM and immediately set on the road to economic recovery. So how high do we now expect the Bank to raise interest rates in a futile attempt to bring down UK inflation to this arbitrary 2% target, how many firms would we be willing to see wiped out, and how many people would we be content to see joining the dole queue, losing their homes and often their families as well?”

    1. Timaction
      June 23, 2023

      Indeed. All to try and rescue the Snake and his targets. We cant afford him or his mass immigration policy. Hows the boat people target going? How many deported or sent to Rwanda? How many of France’s illegals has he sent back straight away? Warned France they have had enough time and money to resolve this by removal of these people elsewhere or we send them back immediately. We’re being played. Only told how many more airfields or ships to house them. None for English taxpayers or our veterans. Is this an EU imposed quota the treacherous Tory’s have signed us up to? We remember May’s traitorous Chequers deal and yet she criticises Boris and his integrity. Time for Tory’s to go. All trust is spent.

  24. glen cullen
    June 23, 2023

    But who’s advising Hunt ??????
    I see our commercial banks tanking again on the stock-exchange this morning ….is anyone in government watching this (apart from SirJ) as the banks share price(s) is a good barometer of the countrys financial health

  25. William Long
    June 23, 2023

    Sadly I do not suppose the Prime Minister or Chancellor include the lndepenent in their reading.
    And, from his statement yesterday, it is now crystal clear that Mr Bailey thinks that wage rises are a cause of inflation rather than a symptom, so we are well and truly back in the Heath Barber era, with no sign of a Joseph or Thatcher on the horizon.
    The only hope seems to be a new party,but it looks as if we will have to suffer Starmer first.

  26. Berkshire Alan
    June 23, 2023

    The simple fact is the government have the final say and are responsible
    They set the rules and choose the polices and put people in the various positions they hold

  27. acorn
    June 23, 2023

    An obsession with efficiency has meant that UK infrastructure has been run into the ground. Cost-cutting across; and shrinking of, every sector of the public economy has been given a higher priority than capacity building.

    Britain has the lowest rate of business investment of any G7 country. The private sector has tended to prefer dividend pay-outs and share buy-backs to renewing and upgrading the privatised infrastructure they got for peanuts. Conservative governments don’t do long range strategic planning and leave it to free market capitalism. Which is why the UK ends up with lots of different size square pegs that don’t fit in different size round holes.

    The UK aggregated Current Account deficit is second only to the USA. The problem of the UK importing so much stuff, for so long, is that foreigners end up with large Sterling currency accounts at the BoE. They will use that cash initially to buy Gilts that pay interest. Or, they could buy a Football Club; a car factory or more London real-estate. Jacking up interest rates allows foreigners a discount on Gilts and a foreign exchange bonus when they inevitably move out of Sterling into Dollars.

    As Viscount Hanworth said in 2015. “We have managed to achieve the necessary balance of payments by selling our assets to foreign owners. This cannot continue indefinitely since the supply of assets for sale is limited. It will eventually be exhausted and we will find ourselves in an acutely impoverished state.”

  28. Derek
    June 23, 2023

    Interesting, “The Bank’s decision to make a large sale of bonds just before the Kwarteng budget along with the rate rise pushed bond prices down”.
    And I thought the then Chancellor was fired for getting it wrong. So Mr Kwarteng became the scapegoat of the BoE and his enemies within the Treasury no doubt.

    My, does this country desperately need a change of those who run the BoE and in the Treasury, who appear to be causing even more problems with each move they make.
    Wake up PM and do right for OUR country. You might even win next year if you do.

    1. Mickey Taking
      June 23, 2023

      ‘You might even win ‘ – not a chance. And the only possible character (thank god) is out of the running surely.

      It sounds like imagining a boxing match – round one the lightweight inside 3 minutes has been floored 3 times, has a swollen lip, both eyes cut and closing, struggling to lift arms in a sort of defence, The corner calls out ‘come on’ its not over yet’.

  29. Lynn Atkinson
    June 23, 2023

    When I look at incomes since 2020 in the wealth creating sector, they have dropped remarkably. What is the official figure I wonder? Nevertheless productivity has increased.
    The State Sector, which must include the Benefits bill and the Asylum bill as well as those who ‘work’ for the state has seen a remarkable increase in income over the same period, and a drop in productivity.
    The quantitative easing confetti was not evenly distributed across the nation, but once again it is from the private sector which the BOE seeks to mop up.
    This is going to end badly. We will are paying for the Joker Johnson, and his comic friend Zelensky who lost 280 tanks (1/3rd of the whole) in the first 15 days of his offensive Offensive. (Also 15,000 people probably including the Commander of the Armed Forces, and much else).
    I want to opt out of all but basic Government function. They do not have my authority to engage in a power-play unnecessary war, I did not agree with the Covid fiasco, I refute all Green policies. I want an Opt out from paying for all this nonsense!

  30. Original Richard
    June 23, 2023

    “The Bank also needs to take an interest in money and credit. It needs to look at the way expanding its balance sheet is inflationary and contracting it too fast may produce a recession.”

    This is all ‘fiddling while Rome burns’ activity. Our economy will continue to spiral ever more quickly downwards as long as Parliament continues to support the chimera of Net Zero.

    As I write, the 27 GW of installed wind power is providing just 2.85 GW (9.7% of demand) and has only been above 5 GW for around 5 days’ worth in the last month.

    The idea that we are the “Saudi Arabia of wind” and the claim on P19 of the Net Zero Strategy – Build Back Greener that we will have cheap, abundant, “always there at the flick of a switch” energy from renewables is complete and utter nonsense.

    As the NAO pointed out in their March report “Decarbonising the Power Sector” the CCC/DES&NZ have no plan for storage when the wind doesn’t blow and the sun doesn’t shine and consequently we are heading for expensive and intermittent supplies of electricity.

    This will destroy our economy, made even worse when coupled with the forced transition to expensive and impractical evs and heat pumps.

  31. Keith from Leeds
    June 23, 2023

    A simple summary of your article is that policies by the BOE & Government have been a total failure for many years. So who & when will we see the incompetents sacked for failure? It seems the Chancellor & PM are frozen into inaction because they agree with the groupthink that got us into this mess!
    Where is the action to ruthlessly cut government spending, to live within our means & make room for tax cuts in both personal & business taxes? Then, surprise, surprise, the economy will grow. Sensible personal tax cuts could also ease the pain for those with increased mortgages.

  32. Stephen Holloway
    June 23, 2023

    Great article!

    I guess the question one has to ask is, The Governor Mr Andrew Bailey is appointed by the Governmen, surely the criteria applied to such an appointment is not so restricted that they choose a puppet who merely follows what the Treasury state and that as a qualified economist he is capable of a broad spectrum of thinking and not just this myopic approach to controlling inflation?

    1. Donna
      June 24, 2023

      Bailey isn’t a qualified economist. He studied history (but doesn’t appear to have learned any of the lessons).

  33. ukretired123
    June 23, 2023

    Inflation and all its other catastrophic effects could be tackled with the right Gov of the Bank of England who has been a disaster possibly comparable to another “leader” in Russia.

    1. Hat man
      June 23, 2023

      Boris Yeltsin was a long time ago, UKretired123.

      He was a disaster for Russia, but at least he did what ‘we’ wanted.

  34. Iain Moore
    June 23, 2023

    Off topic.

    I saw a small bit of Question Time ( there is only so much of Alistair Campbell I can tolerate) yet again the BBC’s bias was at work, where Alistair Campbell got to rant on without intervention, Ben Habib and yourself had to cope with a flurry of Fiona Bruce’s ‘helpful’ interventions . This is BBC playbook stuff, allow arguments they approve of to go unchallenged, while using interruptions to ensure other points of view aren’t allowed to be developed. I did see you give Fiona Bruce a small rebuke for her constant interruptions, but that isn’t enough, in these sort of scenarios other political parties aren’t who you are up against, it is the BBC, and you need to go toe to toe with them, show them up to be the hostile party they are, not the impartial umpire they pretend to be.

    1. glen cullen
      June 23, 2023

      SirJ comes across as a traditional Tory promoting Tory membership views and their desired policies, ditto Tory chairperson Lee Anderson on his new show on GB News …so how come our dear leader and his team come across as labour
      Two completely differing messages and viewpoints can’t be good for the party and country

  35. Bert+Young
    June 23, 2023

    The present relationship and controls with the BoE are clearly too loose . The many errors and misjudgements that have occured are evidence enough that the Government have not managed them in the way they should have . The result is part of our present economic mess and the reason our inflation is so high . Either 10 Downing Street is managing and guiding or it is not ; the evidence shows the latter .

  36. Denis+Cooper
    June 23, 2023

    Off topic, the letter I sent to our local paper for the seventh anniversary of the EU referendum:

    has indeed been published, under the heading: “Will EU backers accept they were misled?”.

    While in this blog article:

    the author makes some rather similar claims:

    “The reality is leaving the EU has made very little economic difference at all and this is backed up by trade levels with the EU that are broadly following historic pre leave trajectories, a GDP performance that is about as bad as the EU’s but certainly no worse, continuing dominance of the City and an exchange rate with the Euro and USD that has actually slightly strengthened since our formal leave date.”

  37. a-tracy
    June 23, 2023

    EU average inflation in May 2023 was 7.1%. The USA 4%.
    EU countries with better inflation than ours includes:
    Italy 7.6%
    Germany 6.1%,
    France 5.1%
    Then on the other side
    Hungary 25.6%
    Latvia 17.2%
    Czechia 16.5%

    Carney blames ours on the fallout from Brexit. He also said and lets make a note of this “interest rates are likely to remain higher for years”.

    We didn’t apply import trade barriers so what is the “negative supply shock” up to now? He goes on “There’s no joy in saying, well, we told you so”. Is this being done to prove the remainers right on the topic they control?

  38. Original Richard
    June 23, 2023

    The policies of Left are completely transparent when it is understood they are designed to impoverish a nation and by doing so increase the numbers of their core electorate and thus gain power.

    It used to be the case that their opponents were the capitalists such as the Conservative Party, as it once was.

    But this has all changed with very rich and powerful elite corporate capitalists now seeing an opportunity for themselves to gain permanent power and immense wealth through the impoverishment of the western middle classes to a point where they “will own nothing”.

    This explains why we have a Uniparty Parliament where both are promoting massive immigration and the entirely false narrative of CAGW requiring the forced pursuit of the economy destroying Net Zero Strategy.

  39. Ian B
    June 23, 2023

    “No10 defends Bank of England’s independence” OK, then let them carry 100% their own debts. You cant secure bailouts from the taxpayer and then not be held responsible to the same taxpayer. Politics playing with words, independence means just that – you stand on your own 2 feet.

    Or is that just No10 just trying to get out of their responsibilities to the taxpayer once more.

  40. Ian B
    June 23, 2023

    Elsewhere in the Media – that Man again ‘The polling was commissioned by the Tony Blair Institute.’ stirring up out of spite with loaded questions

  41. Ian B
    June 23, 2023

    We have a Conservative Government just taking money from our wallets to just give, that is give, to the BoE to cover their independence failures, without any expectation or responsibility attached.

    Surely if they are able to give money away in that manor why cant we all have some?

    The whole economy gets slaughtered with tax rises, to cover the cost of this Conservative Governments couldn’t care less excess expenditure attitude.

    Who is responsible for the UK tax spend if it is not this Conservative Government?

    Their attitude is not right, rational and it is certainly not fair on those footing their continued blunders.

    This conservative Government has given the BoE carte blanche to wreck the UK economy for a generation on the premise it is not either of them at fault or responsible. It the taxpayer that is at fault they have got to earn more so we can loose more. Their attitude is not right, rational and it is certainly not fair on those footing their continued blunders.

  42. glen cullen
    June 23, 2023

    My local fuel station has today put up the price of petrol by 2p to 141.9p per litre …now is that a result of the hike in interest rates or the continuing levies for net-zero, because it isn’t a reflection of the market oil prices (WTI Oil Barrel price $110 June 2022 and today $70 June 2023)

  43. Stred
    June 23, 2023

    I don’t believe that this post lockdown inflation is only because of the money created to finance Sunak’s generosity with loans, full public sector pay and furlough for, supposedly, not working sat home. OK there are swollen bank accounts topped up when saving travelling and doing very little but no-one wants to pay more for something that cost less a year ago.
    Those providing goods and services in building and entertainment have dwindled in number as some have given up through IR30 or the energy cost rose to ridiculous levels, wiping out profits. Many businesses closed after reopening. They still are as material costs rise. The Reset anticipated this and set the rules for disinvestment in carbon fuels which already were rising before Russian sanctions. Regulations banning ICE engines and older Euro vehicles also forced used car prices higher. Lithium costs have risen. Cement, glass, bricks, tiles all need heat and the deliberate taxing of carbon fuels forced high inflation. The idiotic reduction in farm production could not have been designed better to forced grocery prices higher
    And of course the corporations and banks all benefit from their increased monopoly as SMEs go bust and can be asset stripped.
    There is more to it than just money supply. China and Japan did not follow the rules on carbon but burned more coal and gas. There were no reduction in production and imports of Russian food and materials became cheaper as Western countries shunned them.

  44. glen cullen
    June 23, 2023

    Home Office – 22 June 2023
    Illegal Immigrants – 312
    Boats – 8
    ‘’interest rates aren’t going to stop me’’

  45. ChrisS
    June 23, 2023

    Today, Hunt called in the heads of banks to try and get a deal on some flexibility for mortgage customers.

    He was asking the wrong question : I was an Independent Financial Adviser for 25 years and my investment clients used to send their children and partners to arrange their mortgages – often with contributions from the bank of mum and dad.Ten years ago, mortgage deals were very competitive but before I sold my practice, as rates dropped, I started to see an alarming trend emerging.

    Standard variable rates, (SVR), which every deal reverts to when the fixed or dicount period ends, were very low : somewhere around 1% over base rate. As bank rate dropped, lenders started to increase the headroom above base rate for their fallback SVR. Many were set at 4% or even 5% above base and still are.

    I stopped advising clients to take such deals as I was extremely uncomfortable at what could happen if they were for any reason unable to remortgage at the end of their fixed rate deal. This has proved to be the case and those coming off fixed rates in the next year are going to be in for a much bigger shock that they should be.

    Instead of tinkering with minor terms of mortgage deals, Hunt should be demanding that SVRs be limited to, say, 1% over Bank of England Base Rate as they almost always were before the last few years.

  46. acorn
    June 23, 2023

    … as we continue to gather evidence for the prosecution; question your local MP as to his or her stance on the content of the following. (Google “…” to get access to the abstract.)

    “From Big Bang to Big Crash: The Early Origins of the UK’s [Thatcherite] Finance-led Growth Model and the Persistence of Bad Policy Ideas” (Tami Oren & Mark Blyth). Also:

    “Round the Houses: Homeownership and Failures of Asset-Based Welfare in the United Kingdom” (Johnna Montgomerie & Mirjam Büdenbender).

  47. Lester_Cynic
    June 23, 2023

    I didn’t think that would last long
    My friend was absolutely correct

  48. Lester_Cynic
    June 23, 2023

    I didn’t think that would last long
    My friend was absolutely correct

    Old habits die hard

  49. Lindsay+McDougall
    June 23, 2023

    Let’s get the facts right. The Bank of England’s inflation target is an AVERAGE of 2% pa, not a minimum. By the end of 2024, the total expected overshoot on target for the three years 2022 to 2024 will be about 16%. To get back on track, 8 years of zero inflation are required. Politicians should remind the Governor of this.

    What is a non-inflationary annual borrowing requirement? UK GDP is £2500 billion (order of magnitude). Assuming real GDP growth of 2% pa (that’s being generous), we need to create £50 billion of new money pa in order to keep prices stable. The easiest way to do this is to have government borrowing of a similar amount.
    Government borrowing in April and May 2023 has totalled £45.6 billion, which extrapolates to £273.6 billion in a full year. We are way off target. Lis Truss got sacked for that projected level of borrowing.

    The idea that 2% inflation pa is better than zero inflation originates from Third Way politicians like Harold MacMillan and Tony Blair, top politicians but useless economists.

    Currently, public expenditure is running at 47% of GDP, a typical figure for LABOUR Governments. If you tell me that the current Labour Party would spend more, I simply don’t believe you. Kier Starmer may be an old fashioned Leftie, but Rachel Reeves and Wes Streeting know what is required.

    As things stand, I intend to vote for the Reform Party. There is a simple way to avoid this:


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