Jacob Rees Mogg attacks Bank of England
Jacob Rees Mogg has criticized the Bank of England’s handling of the initial stages of the inflation crisis.
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He claimed that errors “are always made” but that “there were a series of circumstances that meant the financial statement of late September 2022 had implications that led to the rapid demise of that government.”
He claimed that this occurred around the time when the Bank of England was not raising enough interest rates and slowing dealing with the inflationary crisis.
Rees Mogg said that “The independent Bank of England only has one job, and that is to keep inflation below 2%.” It has clearly failed to accomplish that task. This is not the government. That is the independent Bank of England.
“As a Minister we all had the responsibility to pretend that Bank of England was doing amazingly well. It wasn’t. It is an institution which has let the country down.
The government covered up for the Bank of England and took the entire blame for financial market problems. This was partially but not exclusively the government’s fault.
Rees Mogg answered a question later about rising mortgage rates being a new political issue. He said they were a problem, but inflation needed to be addressed.
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He stated that the Bank of England should not have completed the last stage of quantitative easing in the pandemic. This added fuel to fire and increased the inflation rate. Going back further, it should have normalised interest rates in the 20 teens.
Since the beginning of British monetary policies, independence of the BoE was a keystone. Truss’s government broke from tradition when some of its ministers attacked the Bank’s decisions.
Rees-Mogg was among the Bank critics at the time and faced severe criticism from economists.
He said that the UK’s market turmoil wasn’t entirely due to the minibudget at the time and that the Bank should be held responsible.
Deutsche Bank’s chief UK economist Sanjay Raja told the Commons Treasury Committee in October the mini-budget was the “straw that broke the camel’s back”.
Raja said there was “absolutely a global component” to the subsequent chaos but argued “idiosyncratic UK-specific component” as well.