Cabinet minister ‘surprised’ by Bank Governor’s ‘apocalyptic’ inflation warning
Bank of England Governor Andrew Bailey’s appearance before MPs has raised eyebrows around the Cabinet table.
Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.A Cabinet minister said he was “surprised” by the Governor of the Bank of England issuing an “apocalyptic” warning about rising food prices.
In a sign of the tension between the Government and the Bank, Brandon Lewis criticised Governor Andrew Bailey’s choice of words to describe the rising cost of living.
Mr Bailey delivered a series of bombshell warnings about the impact of rising inflation and admitted he felt “helpless” in the face of global pressures during an appearance before MPs.
The Government has insisted it supports the Bank of England’s independence, but behind the scenes, ministers have been critical of the failure to curb spiralling inflation.
Mr Lewis’s public comments a day after the Governor’s appearance before MPs are a signal of the private concerns being expressed within the Cabinet about his effectiveness.
I was surprised to see that particular turn of phrase, I have to say
Asked about Mr Bailey’s comments, Northern Ireland Secretary Mr Lewis told the BBC on Tuesday: ““I was surprised to see that particular turn of phrase, I have to say.
“But the Bank of England is independent, they will have their view of their assessment, their economic view of where things are and where things are going.
“We do recognise … and as a constituency MP I see the challenges that some of my constituents face, that we all face.
“In my part of the world, we are all – the majority of people – on oil fire heating and you see that change in the price which has a big impact on people.
“That’s why I think it is important as a Government we put in the packages of support we’ve put in and, as the Chancellor said, this is something we will keep under review because of the global pressures, as the Bank of England Governor said yesterday, that we’re seeing on economies around the world.”
The Bank of England operates independently of government but has a mandate to keep inflation below a 2% target set by ministers.
The Office for National statistics recorded inflation at 7% in March and on Wednesday it is expected to unveil a figure of 8% for April.
The Bank of England has said inflation is likely to peak at 10.25% during the final quarter of 2022.
Mr Lewis’ public comments follow a Sunday Telegraph article which quoted unnamed Cabinet ministers criticising the Bank and suggesting its independence was being questioned within Government.
One said the Bank had been failing to “get things right” and another suggested that it had failed a “big test”.
The Prime Minister’s official spokesman said: “The Bank of England has independence over monetary policy, it’s not for the Government to comment on the conduct or effectiveness of its monetary policy.
“We are fully committed to the its independence and to the 2% inflation target.”
In his evidence to the Commons Treasury Committee on Monday, the Governor stressed that the war in Ukraine has resulted in an unpredictable jump in inflation, highlighting that there is still a “major worry” over further rises in food prices due to the conflict.
“It is a major worry for this country and a major worry for the developing world,” Mr Bailey said.
“Sorry for being apocalyptic but that is a major concern.”
He said the main driver of inflation is “the very big, real income shock which is coming from outside forces and, particularly, energy prices and global goods prices”.
He warned “that will have an impact on domestic demand and it will dampen activity, and I’m afraid it looks like it will increase unemployment”.