Bank Of England's Late Action: High Cost Of Inflation

Alex Brummer wrote this for the Daily Mail.

Blog posted on May 23, 2023 at 10:23 PM and last updated at the same time.

The Bank of England isn't doing well with controlling inflation. This is hurting the country.

Governor Andrew Bailey talked about the Bank's monetary policy to MPs before consumer prices data for April was released today. He thinks the Bank needs to think carefully about its approach to dealing with big shocks.

Huw Pill, the chief economist, said that the models used by the Bank of England's analysts did not work well when faced with sudden changes in energy and food prices.

Highly increased prices are negatively affecting output and making the cost of living more costly.

The International Monetary Fund made a new prediction about UK's growth rate. It could have been even better if the country didn't need to control inflation by tightening fiscal and monetary policies.

The Bank of England has to consider how to handle monetary policy during unforeseen events. Andrew Bailey advised this to the Commons. It is important to think carefully and be uncertain about what to do.

The Fund thinks UK prices won't get back to 2% until the middle of 2025.

The IMF thinks that inflation will only be 5 per cent this year, which is good news for Prime Minister Rishi Sunak. It used to be higher.

The government promised to make it a priority. The Bank didn't act quickly enough against rising prices. They also kept interest rates very low for too long. This is now causing problems.

The latest numbers say the budget deficit has risen to £25.6 billion in April. It's £3.1 billion higher than what was predicted for March.

The Office for Budget Responsibility highlighted two reasons for why borrowing has increased a lot. Firstly, more money is being paid in interest on the national debt, up by £3.1billion compared to last year. Secondly, welfare spending has also increased.

Prices are rising and neither factor is likely to change.

Britain's national debt has almost a quarter held in inflation indexed gilts.

Bailey and the Monetary Policy Committee made mistakes that hurt us. Pay deals and pension uprates won't help with the high cost of living.

BT is going through a tough time. The leader, Philip Jansen, spoke about decreasing the workforce by 55,000 before 2030. This move is due to the completion of the full fibre broadband push.

Patrick Drahi, who owns Sotheby's auction house, has increased his ownership of BT. He now owns 24.5% of the company, up from 18%.

Drahi said he doesn't want to make a full takeover of BT. This means he can't do it for six months.

He doesn't seem like he's content with only making noise and earning profits. His previous decisions show that he's not an idle activist.

He is passionate about telecoms and has left his mark in various countries like France, the US, Portugal and Israel.

Drahi's investment in BT seems planned. It appears that he is interested in UK communications for a long time.

He is committed and this shows that investors from all over the world are interested in the UK. Some opposition parties have tried to bring down the UK's reputation, but this hasn't worked.

Drahi won't be joining the BT board right now. This could be because he's working with Jansen. They both want to make the most of the UK infrastructure, which hasn't been used well.

BT has a smaller size with modern broadband and EE mobile network. This might lead to more profits and future partnerships.

Drahi will not be idle. He is expected to take action.

Activists wanted to go on the stage during Shell’s meeting in London. This might make people want to support M&S chairman Archie Norman's campaign. He wants shareholders to have more chances to talk with directors online. This was said in The Mail on Sunday.

I disagree. Although live AGMs can be boring and attract odd people or those looking for free food or drink, they have helped make important changes in the past.

Barclays board was under pressure in Apartheid era. They disinvested and the racist government fell in South Africa.

Shell may have to consider its green targets and include more environmental voices on its board as Follow This continues to voice its dissent. Just like how Exxon had to make changes after similar efforts.

Bank Of England's Delay In Tackling Inflation Has Resulted In High Costs - A. Brummer

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