United Kingdom’s finance minister Jeremy Hunt said previous Bank of England forecasts had not been accurate. British inflation was 8.7 percent in May and the central bank recently raised interest rates again.
Hunt said the central bank must ensure that their forecasts are more accurate in the future. Hunt has not previously criticised the central bank, The Telegraph reported.
“The head of the central bank has been outspoken that their inflation forecasts have not been accurate. They are doing an independent review to see how they can do better. It’s clear there have been problems. We need to make sure that the forecasts are better.” Hunt said.
The central bank has previously said that the rise in prices is temporary. British inflation was 8.7 percent in May, the central bank’s target is two percent. The central bank now expects inflation to reach two percent only in 2025.
The central bank is also tightening monetary policy. Recently, the central bank unexpectedly decided to raise interest rates again, and rates are now at five percent. This is the highest interest rate level since 2008.
Andrew Bailey, the head of the central bank, admitted at the beginning of the month that it was taking longer to rein in inflation than the bank had expected. UK inflation is still among the highest in Europe.
Britain’s Institute of Economic and Social Research estimated that more than a million households could run out of savings this year because of higher interest rates.
In conclusion, the recent actions taken by the central bank to curb inflation in the UK have come under criticism from finance minister Jeremy Hunt. Hunt expressed concerns about the accuracy of the bank’s forecasts and emphasised the need for improved future predictions. This critique comes as British inflation reached 8.7 percent in May, surpassing the central bank’s target of two percent. The bank’s decision to raise interest rates unexpectedly further highlights the urgency to address the inflationary pressures. Despite the central bank’s claim that the price hikes are temporary, the head of the bank, Andrew Bailey, acknowledged the challenges of reining in inflation. As UK inflation remains among the highest in Europe, the Institute of Economic and Social Research even estimated that over a million households could deplete their savings due to higher interest rates. With the central bank’s commitment to conducting an independent review and striving for more accurate forecasts, it is essential to find effective measures to stabilise prices and support households during this period of economic volatility.