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It seems Andrew Bailey has been reading Vox Political.
The day after I pointed out that the Bank of England’s policy of quantitative tightening (QT) has stabbed Chancellor of the Exchequer Rachel Reeves in the back, the bank’s governor has rushed to tell MPs there is no need to “exaggerate” the problem.
He wants us to believe that the sharp rise in government borrowing costs is nothing to worry about.
Bailey’s spin
Bailey told the Treasury select committee that the 30-year bond yield hitting a 27-year high was not significant because the government is borrowing more over five or 10 years instead.
He insisted that Britain’s rising debt costs were just part of a global trend, not the Bank’s fault, and urged commentators not to “over-focus” on the figure.
And, like any central banker protecting his turf, he stressed the importance of the Bank’s independence, warning politicians not to interfere.
The bitter reality
His reassurances don’t stand up:
-
Borrowing costs are rising across the curve — not just on the 30-year bonds Bailey dismisses. Whether Reeves issues five-year, ten-year or longer-term debt, she still ends up paying more.
-
Calling it a “global trend” ignores the fact that the Bank’s own policy of dumping government bonds back into the market through QT is directly adding pressure here in the UK.
-
Hiding behind “independence” is no defence when unelected officials are making choices that strip billions from the Treasury and hand them to rich creditors.
The easily-foreseen consequence
Bailey may say “don’t exaggerate”, but the consequence is simple: money that should be used to improve people’s lives is being siphoned off to service debt.
And Reeves is being forced to pay the bill for bonds issued by the last Conservative government — a trap not of her making.
The inevitable conclusion
The governor can backpedal all he likes. The truth remains that the Bank’s policies are strangling Reeves’s room for manoeuvre and ensuring that The UK’s wealth flows upwards, not outwards.
If that is not a political act, what is?
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Bank of England backpedals after Vox Political exposes ‘QT’ trap
Share this post:
It seems Andrew Bailey has been reading Vox Political.
The day after I pointed out that the Bank of England’s policy of quantitative tightening (QT) has stabbed Chancellor of the Exchequer Rachel Reeves in the back, the bank’s governor has rushed to tell MPs there is no need to “exaggerate” the problem.
He wants us to believe that the sharp rise in government borrowing costs is nothing to worry about.
Bailey’s spin
Bailey told the Treasury select committee that the 30-year bond yield hitting a 27-year high was not significant because the government is borrowing more over five or 10 years instead.
He insisted that Britain’s rising debt costs were just part of a global trend, not the Bank’s fault, and urged commentators not to “over-focus” on the figure.
And, like any central banker protecting his turf, he stressed the importance of the Bank’s independence, warning politicians not to interfere.
The bitter reality
His reassurances don’t stand up:
Borrowing costs are rising across the curve — not just on the 30-year bonds Bailey dismisses. Whether Reeves issues five-year, ten-year or longer-term debt, she still ends up paying more.
Calling it a “global trend” ignores the fact that the Bank’s own policy of dumping government bonds back into the market through QT is directly adding pressure here in the UK.
Hiding behind “independence” is no defence when unelected officials are making choices that strip billions from the Treasury and hand them to rich creditors.
The easily-foreseen consequence
Bailey may say “don’t exaggerate”, but the consequence is simple: money that should be used to improve people’s lives is being siphoned off to service debt.
And Reeves is being forced to pay the bill for bonds issued by the last Conservative government — a trap not of her making.
The inevitable conclusion
The governor can backpedal all he likes. The truth remains that the Bank’s policies are strangling Reeves’s room for manoeuvre and ensuring that The UK’s wealth flows upwards, not outwards.
If that is not a political act, what is?
Share this post:
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