We won’t get one, though. Not until June at the earliest, when we urgently need one today. Why? Because the Bank of England doesn’t think we’ve suffered enough yet. And until it does, it’ll hold base rates at 5.25 percent, just to make sure we keep hurting.
The BoE’s biggest worry is that we’re all getting massive pay rises and earning far too much money for the good of the economy.
It says wages are rising too fast and until they slow down, we can’t expect an interest rate cut.
In February 2022, BoE governor Andrew Bailey told workers not to ask their bosses for big pay rises as that would further drive up inflation.
This is the inflation Bailey ignored until it was too late, remember.
Since that unforced error he has been demanding hard-pressed workers foot the bill for his mistakes by refusing to ask for a little extra in their pay packet. This from a man who earned £597,592 last year.
This is only part of a pattern.
Last August, BoE chief economist Huw Pill urged Brits to “accept” that we’re poorer and stop asking for higher wages.
This from a man who earns £190,000 a year.
In December, deputy governor Ben Broadbent said the BoE needs to see a “more protracted and clearer decline” in wage growth.
For the record, Mr Broadbent earned £376,053 last year.
These wealthy men actually want the rest of us to be poorer. And until they see clear signs that we are, we can forget an interest rate cut.
Maybe bank officials should lift their heads from their screens and look what’s happening in the country, not just the bit of central London surrounding its plush offices.
They’ll see boarded up shopfront, vandalised premises, and beaten down people.
Yet apparently, we’re all earning too much.
There is one category of worker who isn’t earning too much, though.
One particular institution where the workers deserve a big fat juicy pay rise and to hell with the impact on inflation.
What institution could that be?
That’s right, the Bank of England.
BoE staff are set to get a four percent pay rise plus a one percent salary top up from April, despite Andrew Bailey telling ordinary Britons not to demand wage increases for themselves.
It said it needs to pay its staff more to retain them in a competitive jobs market. Don’t the rest of us operating a competitive jobs market, too?
Apparently not.
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I’d feel happier about these pay rises if the BoE had been doing a good job over the last few years, instead of making one mistake after another.
It’s making another one today, in my view, by holding base rates too high for too long.
In fairness, I accept that the BoE has only a limited weapon in its inflation-fighting armoury, and that’s interest rates.
It’s a blunt instrument. All the BoE’s monetary policy committee (MPC) can do is keep jacking up rates until everybody feels so poor that the economy falls into recession.
As with any blunt instrument, it needs to be wielded with great care. Instead, the MPC continues to bash us over the head with it, despite clear signs that inflation is on the run.
Incredibly, two members have been voting to increase interest rates this year, rather than cutting them. They clearly don’t believe that we have suffered enough.
The economy will take even longer to recover and millions will struggle as a result. And unlike lucky BoE staff, they won’t even get a nice juicy pay rise to compensate.
