A Perfect Storm Threatens to Engulf the Bank of England
The “Old Lady of Threadneedle Street” faces a tough challenge as forces threaten to drive the economy into stagflation.
Storm’s coming.
Photographer: Cate Gillon/Getty Images EuropeAll of the world’s major central banks face a tricky test as they contemplate slowing and unwinding the various stimulus packages introduced to ameliorate the economic impact of the pandemic. But a combination of domestic factors threatens to make life harder for the Bank of England than for its peers.
The Old Lady of Threadneedle Street should be starting to slow the pace of bond-buying in its quantitative easing program, paving the way for official interest rates to eventually rise from their current ultra-low level of 0.1%. But an anticipated rebound in growth is stumbling. And policymakers’ claims that the recent surge in inflation is only temporary are being undermined by a perfect storm of events outside the central bank’s control.