Bank of England Governor Andrew Bailey denied that officials allowed inflation to get out of control by acting too slowly, saying interest-rate increases a year ago would have damaged the recovery from the pandemic.
The remarks in an interview on BBC radio on Friday respond to growing attacks on the UK central bank from the ruling Conservative Party. Inflation is at a 40-year high and forecast to climb further in coming months.
While the BOE was first among major central banks to lift rates, it’s fallen behind the US Federal Reserve in the pace of increases. Bailey noted that a year ago, the UK was just emerging from lockdown and policy makers were worried about a spike in unemployment as the government wound down furlough payments.
“I would challenge anybody to have been sitting here a year, two years ago say there’s going to be a war in Ukraine, and it’s going to have this effect on inflation,” Bailey said on the “Today” program. Asked whether acting early would have risked a recession, he said, “Yes.”