BoE must sharpen response to big economic shocks: Bailey

Bank of England officials made their clearest admission yet that they were slow to respond to a jump in inflation and have lots to learn about how they handle the sorts of large shocks buffeting the global economy.

BoE governor Andrew Bailey acknowledged that inflation had already been on the rise before Russia's invasion of Ukraine and that policymakers had underestimated the persistence of upward forces on wages and prices.

"The shocks that we've faced have been unprecedented," Bailey said Tuesday in Parliament. "I think there are big lessons about how do we operate policy in that world and in a world of very substantial uncertainty."

The remarks in response to lawmakers on the Treasury Committee underscore rising political concern about the impact the cost-of-living crunch is having on consumers after seven months of double-digit inflation driven by food and energy prices.

Bailey said the BoE's Monetary Policy Committee had held off on responding to inflation during the pandemic because it was worried about the possibility of a surge in unemployment as the government wound down its job-supporting furlough program.