Livid: The BoE just betrayed England with incompetence, says furious deVere founder
The Bank of England has been asleep at the wheel says the irate CEO of one of the world’s biggest asset managers, after Britain’s rampant inflation hit a fresh 40-year high this week.
According to the latest official estimates, the price of Things for Poms in June were once again driven relentlessly higher by the volatile cost of basic foods and energy prices which are being exacerbated during a stifling summer heatwave.
It’s a textbook cost-of-living crisis created by the BoE’s “woeful inflation management”, and one which could strip the British pound of its exalted credibility – so says the boss of the influential asset management giant deVere Group, Nigel Green.
The UK’s Consumer Price Index rose 9.4% annually, according to estimates out Wednesday, slightly above consensus and up from 9.1% in May. And the Consumer Price Index including owner occupiers’ housing costs (CPIH) rose by 8.2% in the year to June (up from 7.9% in May.)
CPI 12-month inflation rates for the last 10 years – June 2012 to June 2022 via the UK ONS:
These are some very toppy forecasts from the Brit’s Office for National Statistics (ONS), with the only glimmer of light that they somehow still remain short of the 2.5% monthly increase back in April.
Globally central banks have been rushing to hike rates to meet the challenge of surging inflation.
Already under intense pressure, the BoE has now gone for five straight 25 basis point (bps) hikes, but the bank’s Guv’nah Andrew Bailey, on Tuesday Sydenham time said the BoE’s Monetary Policy Board would be looking hard at a 50bps hike at its next (August) policy meet.
Nothing is off the table, Bailey said, with the ONS reporting overnight that its indicative CPI estimates make for a 0.8% monthly rise in consumer prices, above May’s 0.7% lift and largely putting the blame on energy, fuel costs and food.
Motor fuel costs in the UK are up over 42% year on year, the highest rate since the series began in 1989.
Meantime, this is all making the deVere Group founder incandescent with fury.
He accuses the central bank of being AWOL during the UK’s worst cost of living crisis since the war, one that’s ‘officially got even worse for families and businesses’ across the country.
“This shines the harsh spotlight again on how the Bank of England is failing the UK with its shamefully incompetent grip on the worst inflationary surge in 40 years,” Green said.
“It underscores that the central bank was complacent and passive about consumer prices last year when the country emerged from coronavirus lockdowns.”
Just 12 months ago inflation was the last thing on everyone’s mind. In the UK it stood at a rather idyllic 2.5% and looked safe-as-houses while major economies emerged dozy-eyed and blinking from the dream-like COVID-pandemic.
Then things happened quickly.
First flares of inflation weren’t transitory. Supply lines were actually, really mucked up. China went a little psycho about lockdowns, snarling ports and silencing manufacturing.
And there was also war.
Last month the Bank of America (BoA) warned that the politicisation of the UK central bank and the aneamic British economy risked turning the pound into an ‘emerging-market-like currency’.
The deVere CEO said the “historic” 9.4% inflation read will likely force Bailey and the BoE down that 50bps path into its accompanying risks.
He damned the BoE as having “already failed” on inflation with its “grand-scale inaction and miscalculation”.
“There’s now another risk that it hits the brakes too hard at its meeting next month, and future ones, with excessive rate hikes, which could push the consumer-led economy into not only a short-term but a longer-term recession.”
“Policymakers at the BoE will try and defend themselves by blaming external events, mainly the war in Ukraine – which, of course, haven’t helped…. But the problems, including supply chain disruptions and massive fiscal spending for pandemic relief, were staring them in the face before the invasion.
“These issues did not spring out of nowhere.”