FOR IMMEDIATE RELEASE
Bank Rate rise to 4%: government must share inflation responsibility, says AIMS
LONDON — After today's Bank of England decision to raise Bank Rate by a quarter point to 4% (8–1), the Advisory Initiative on Monetary Sovereignty (AIMS) says ministers should stop treating inflation as a problem for Threadneedle Street alone.
In a new comment published today, AIMS founder Dave Broadway BSc (Hons) argues that when inflation is driven by energy and supply shocks, rate rises cool demand but cannot fix the cause — and households already facing higher fuel and heating bills then carry the cost through mortgages and rents.
Today's Monetary Policy Committee minutes again state that "Monetary policy could not influence global energy prices." Direct energy effects made up about 1 percentage point of September's 3.5% CPI. Wholesale gas, on AIMS's Constraint Watch measure, was about 3.3 times its 2015–19 average in August.
Broadway calls for shared responsibility without weakening Bank independence: when inflation overshoots, the Bank should set out how much comes from supply shocks beyond its reach, and the Chancellor's reply should explain what government is doing on energy, the grid, skills and tax.
Full comment: https://www.aims-uk.co.uk/blog-government-share-of-responsib...
Notes to editors
- AIMS UK (The Advisory Initiative on Monetary Sovereignty) is an independent UK initiative arguing that government can ease inflation by relieving real constraints in the economy while the Bank of England keeps operational independence over interest rates. Website: https://www.aims-uk.co.uk
- Contact: Dave Broadway BSc (Hons), [email protected]
- Constraint Watch and related research: https://www.aims-uk.co.uk
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