The Governor of the Bank of England rejected comments by predecessor Lord Mervyn King that the regulator's actions during the pandemic helped to push inflation to 40-year highs.
Andrew Bailey said the reduction of the UK’s workforce was much more likely to be responsible for high inflation.
“What I reject is the argument that in our response to Covid the bank’s Monetary Policy Committee let demand get out of hand and thus stoked inflation,” he said in Vienna at an event hosted by the Austrian Central Bank.
“The facts simply do not support this.”
He said that gross domestic product was only a little higher than it was before Covid and would probably have been substantially higher if the pandemic had not happened.
“What we do have is a very tight labour market," Mr Bailey said. "But that does not look like a story about rapid demand growth.
“The labour force has shrunk by around 1 per cent since the onset of Covid. It looks much more like an impact from the supply of labour.”
Last week Mr King, who was the bank’s governor in 2008 when financial markets crashed, criticised the policy of the institution during the pandemic.
He said the bank printed more money, in "quantitative easing", at the same time as manufacturers, restaurants and other service companies closed.
This meant that there was more money in the economy, but less to spend it on, which pushed up prices.
His criticism was not limited to Mr Bailey and his team. Mr King said that it was a common feature of all central banks.
“They basically felt: ‘We must demonstrate that we’re here, we must do something’,” he told Sky News.
“But governments were doing a great deal, though in our case the furlough scheme, which was very sensible … it didn’t need central banks to print lots of extra money on top of all that.
“That’s generated a rise in inflation.”
On Monday, Mr Bailey again hinted that the bank could lift interest rates further to help battle runaway inflation.
“We have raised the official rate four times so far and have made clear that in order to bring inflation down to target, we are prepared to do so again based on the assessment at each of our meetings,” he said.
The bank’s decision-making committee set the base rate to 1 per cent this month, its highest point since 2009.
Inflation hit 9 per cent in the year to April as measured by the Consumer Prices Index.
It is the highest since records began and is thought to be higher than at any point since 1982.
David Haye record
Total fights: 32
Wins: 28
Wins by KO: 26
Losses: 4
Avatar: Fire and Ash
Director: James Cameron
Starring: Sam Worthington, Sigourney Weaver, Zoe Saldana
Rating: 4.5/5
Opening weekend Premier League fixtures
Weekend of August 10-13
Arsenal v Manchester City
Bournemouth v Cardiff City
Fulham v Crystal Palace
Huddersfield Town v Chelsea
Liverpool v West Ham United
Manchester United v Leicester City
Newcastle United v Tottenham Hotspur
Southampton v Burnley
Watford v Brighton & Hove Albion
Wolverhampton Wanderers v Everton
What is an ETF?
An exchange traded fund is a type of investment fund that can be traded quickly and easily, just like stocks and shares. They come with no upfront costs aside from your brokerage's dealing charges and annual fees, which are far lower than on traditional mutual investment funds. Charges are as low as 0.03 per cent on one of the very cheapest (and most popular), Vanguard S&P 500 ETF, with the maximum around 0.75 per cent.
There is no fund manager deciding which stocks and other assets to invest in, instead they passively track their chosen index, country, region or commodity, regardless of whether it goes up or down.
The first ETF was launched as recently as 1993, but the sector boasted $5.78 billion in assets under management at the end of September as inflows hit record highs, according to the latest figures from ETFGI, a leading independent research and consultancy firm.
There are thousands to choose from, with the five largest providers BlackRock’s iShares, Vanguard, State Street Global Advisers, Deutsche Bank X-trackers and Invesco PowerShares.
While the best-known track major indices such as MSCI World, the S&P 500 and FTSE 100, you can also invest in specific countries or regions, large, medium or small companies, government bonds, gold, crude oil, cocoa, water, carbon, cattle, corn futures, currency shifts or even a stock market crash.
The President's Cake
Director: Hasan Hadi
Starring: Baneen Ahmad Nayyef, Waheed Thabet Khreibat, Sajad Mohamad Qasem
Rating: 4/5
Company Profile:
Name: The Protein Bakeshop
Date of start: 2013
Founders: Rashi Chowdhary and Saad Umerani
Based: Dubai
Size, number of employees: 12
Funding/investors: $400,000 (2018)
Going grey? A stylist's advice
If you’re going to go grey, a great style, well-cared for hair (in a sleek, classy style, like a bob), and a young spirit and attitude go a long way, says Maria Dowling, founder of the Maria Dowling Salon in Dubai.
It’s easier to go grey from a lighter colour, so you may want to do that first. And this is the time to try a shorter style, she advises. Then a stylist can introduce highlights, start lightening up the roots, and let it fade out. Once it’s entirely grey, a purple shampoo will prevent yellowing.
“Get professional help – there’s no other way to go around it,” she says. “And don’t just let it grow out because that looks really bad. Put effort into it: properly condition, straighten, get regular trims, make sure it’s glossy.”
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Muslim Council of Elders condemns terrorism on religious sites
The Muslim Council of Elders has strongly condemned the criminal attacks on religious sites in Britain.
It firmly rejected “acts of terrorism, which constitute a flagrant violation of the sanctity of houses of worship”.
“Attacking places of worship is a form of terrorism and extremism that threatens peace and stability within societies,” it said.
The council also warned against the rise of hate speech, racism, extremism and Islamophobia. It urged the international community to join efforts to promote tolerance and peaceful coexistence.
