The Lords economic affairs committee criticises the Bank of England for its “inadequate” forecasting models and a lack of intellectual diversity, attributing prolonged high inflation to these shortcomings.
The report highlights errors in the Bank’s handling of inflation following the Covid pandemic and Russia’s invasion of Ukraine, resulting in a dramatic decline in public confidence.
Concerns are also raised about the Bank’s broadened priorities, prompting the committee to recommend reforms for a more focused remit and periodic reviews to enhance future inflation management.
Bank of England’s reliance on “inadequate” forecasting models and lack of intellectual diversity at senior levels blamed for prolonged high inflation levels.
- The Lords economic affairs committee report criticises the Bank for making “errors” in managing inflation following the Covid pandemic and Russia’s invasion of Ukraine.
- Committee warns of a “dramatic” fall in public confidence due to mistakes made by the Bank, impacting its credibility.
- Concerns raised about the Bank’s expansion of priorities, including economic growth and addressing the climate crisis, potentially jeopardising core objectives of managing inflation and ensuring financial stability.
- Lord’s report recommends reforms, suggesting a “pruning” of the Bank’s remit and periodic reviews of responsibilities every five years to better manage future inflation shocks.
