The right call on interest rates, but the Bank should go further on stopping bond sales

Jaya Sood, senior economist at the New Economics Foundation, said:

“Holding interest rates is the right call. When inflation is being driven by the price of gas on global markets, higher rates would not bring down energy costs. Instead, they would add to the pressure on households and businesses, while making it more expensive to prevent future energy shocks with more wind and solar power. The Bank has avoided this today.

“The Bank has been actively selling bonds into the market at a loss, and at a cost to taxpayers. By contrast, the US Federal Reserve and the European Central Bank have only ever let bonds mature. Slowing or tilting active sales is not enough and they should be stopped. However, the coordination with government on bond issuance and sales announced today is a positive step in the direction of better monetary-fiscal coordination.”

ENDS

Notes

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