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Dame Andrea said: “The committee has the feeling that interest rate rises did not happen soon enough and quantitative easing went on too long, but the Bank has not convinced us it was sufficiently focused at the time.”
The Bank has promised to launch a review of its economic forecasting capabilities led by an external expert to try to improve its performance in future.
Andrew Bailey, the Bank’s Governor, this week admitted to a House of Lords committee that the Bank’s Monetary Policy Committee (MPC) had made mistakes in the pandemic and needed to review its policy responses.
He told peers that the supply shock coming out of Covid, the invasion of Ukraine and the fall in jobs market participation in the UK all contributed to the jump in prices.
Sir John Redwood, a Tory grandee, said the Bank needed to undertake a rapid review so it could put its findings into effect as quickly as possible.
He said: “Their inflation forecasts have been way out, and I think they are very hamstrung by not taking money and credit seriously.
“It shouldn’t be a long drawn out review, this is not an academic question – they are still using the same models and same forecasts to make decisions now, and maybe making other decisions that are wrong.”
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