The Bank of England Governor Andrew Bailey is facing a backlash from economists and MPs for ‘crying wolf’ over an interest rate hike. Critics questioned whether he was the right man to lead the Bank after a ‘big communications failure’ on interest rates prompted lenders to raise mortgage costs unnecessarily – and sent currency markets into a tailspin. Andrew Bailey was also criticised for focusing on the Bank’s links to the slave trade and allowing officials to keep working from home at a time when the economy needs urgent attention due to rising inflation. The Governor had given a strong signal that interest rates were set to rise when he said in October that the Bank ‘will have to act’ to control inflation, which is now predicted to hit 5% next year. Yet the week before he surprised economists by voting against an increase, and rates were left unchanged at 0.1%. Lenders including HSBC, NatWest and Nationwide had become so convinced by Mr Bailey’s earlier comments that they had already pulled their best deals or raised rates in advance of the vote. City investors were also wrong-footed, with the pound sent tumbling against the dollar in its worst week since August. Economist Gerard Lyons, who was previously in the frame for the job as Governor, said millions of borrowers were paying the price for ‘poor’ communication by the Governor. Commentators have pointed out that it has already led to higher mortgage rates – and so an impact is already being had on people’s finances. Andrew Bailey has also come under scrutiny for focusing on issues other than inflation and rates as the country attempts to recover from the pandemic and the price of goods and fuel rises ahead of Christmas. In August, the Bank removed oil paintings and busts of seven leading figures from between 1698 and 1814 on the grounds that they had links with slavery. It has now appointed a researcher to ‘explore the Bank’s historic links with the transatlantic slave trade in detail’.
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