Thursday, July 27, 2023

EAC Worried That Bank of England is Over Egging The Pudding


The Bank of England is facing growing pressure from its own Treasury advisers to slow down its campaign to raise interest rates.

A majority of the seven-member Economic Advisory Council to Chancellor of the Exchequer Jeremy Hunt believes that the bank is risking pushing the UK into an unnecessary recession by raising rates too quickly.

The council's concerns are based on the view that inflation is already starting to fall, and that further rate hikes would do more harm than good.

The Bank of England has raised rates five times since December, taking them to their highest level in 13 years.

The central bank has said that it is committed to bringing inflation back to its 2% target, but the council's members believe that the bank is now overshooting its mark.

"We are worried that the Bank of England is raising rates too fast," said one council member. "We believe that inflation is already starting to fall, and that further rate hikes would risk pushing the economy into a recession."

The council's concerns are echoed by some economists, who believe that the Bank of England is now behind the curve in its fight against inflation.

"The Bank of England has been slow to react to the rise in inflation, and now it is overcompensating," said one economist. "This could lead to a sharp slowdown in economic growth."

The Bank of England is due to announce its next interest rate decision on August 4.

It is unclear whether the bank will heed the advice of its Treasury advisers and slow down its campaign to raise rates.

However, the council's concerns suggest that the bank is facing mounting pressure to change course.

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