LONDON (Reuters) – Bank of England Governor Andrew Bailey said on Tuesday the central bank has “huge lessons to learn”, with inflation remaining in double digits and food prices rising at their fastest pace since the 1970s. are increasing.
“I think there are big lessons in how we conduct monetary policy despite very large shocks,” Bailey told members of parliament in a question-and-answer session about the Bank of England’s inability to forecast the magnitude of the shock. Said to. rise in inflation.
Harriet Baldwin, chair of Parliament’s Treasury Committee, told Bailey that the central bank was too late to heed warnings from food producers that costs were rising rapidly, which is now evident in inflation data.
“Something has gone really wrong with your model and your agent network, which is going to give you this advantage in terms of information,” Baldwin said.
Bailey explained that market contacts at the Bank of England were told in February that food inflation had probably peaked, which turned out not to be true, as weather events in other parts of the world affected crops such as sugar.
He also said food producers may have set costs higher than the Bank of England expected, which he believes should have been detected by the central bank.
Earlier on Tuesday, the Office for National Statistics (ONS) reported that Britain’s food inflation stood at 19.1% in March, the second highest among Group of Seven (G7) countries, behind only Germany.
