Mohamed A. El-Erian , Columnist

The Bank of England's Growing Policy Dilemma

The central bank needs help countering stagflation, though it may not get it.

June 22, 2017 at 6:00 AM UTC

Mohamed A. El-Erian is a Bloomberg Opinion columnist. A former chief executive officer of Pimco, he is president of Queens’ College, Cambridge; chief economic adviser at Allianz SE; and chair of Gramercy Fund Management. He is author of “The Only Game in Town.”

Governor Mark Carney is between a rock and a hard place.
Photographer: Adrian Dennis/AFP/Getty Images

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Stagflationary winds -- declining growth and rising inflation -- are among the trickiest economic challenges that policy makers can face. They reduce the effectiveness of policy instruments and increase the risk of mistakes. And this burden should not be placed primarily on central banks, as is currently happening in the U.K.

After holding up impressively well in the immediate aftermath of the June 2016 Brexit referendum, the U.K. economy is coming under pressure. Economic growth has slowed notably, wages are stagnating and inflation has marched up toward 3 percent, the highest among the major advanced economies.