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.
Avatar: Fire and Ash
Director: James Cameron
Starring: Sam Worthington, Sigourney Weaver, Zoe Saldana
Rating: 4.5/5
The specs: 2018 Nissan 370Z Nismo
The specs: 2018 Nissan 370Z Nismo
Price, base / as tested: Dh182,178
Engine: 3.7-litre V6
Power: 350hp @ 7,400rpm
Torque: 374Nm @ 5,200rpm
Transmission: Seven-speed automatic
Fuel consumption, combined: 10.5L / 100km
Day 5, Abu Dhabi Test: At a glance
Moment of the day When Dilruwan Perera dismissed Yasir Shah to end Pakistan’s limp resistance, the Sri Lankans charged around the field with the fevered delirium of a side not used to winning. Trouble was, they had not. The delivery was deemed a no ball. Sri Lanka had a nervy wait, but it was merely a stay of execution for the beleaguered hosts.
Stat of the day – 5 Pakistan have lost all 10 wickets on the fifth day of a Test five times since the start of 2016. It is an alarming departure for a side who had apparently erased regular collapses from their resume. “The only thing I can say, it’s not a mitigating excuse at all, but that’s a young batting line up, obviously trying to find their way,” said Mickey Arthur, Pakistan’s coach.
The verdict Test matches in the UAE are known for speeding up on the last two days, but this was extreme. The first two innings of this Test took 11 sessions to complete. The remaining two were done in less than four. The nature of Pakistan’s capitulation at the end showed just how difficult the transition is going to be in the post Misbah-ul-Haq era.
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Islamophobia definition
A widely accepted definition was made by the All Party Parliamentary Group on British Muslims in 2019: “Islamophobia is rooted in racism and is a type of racism that targets expressions of Muslimness or perceived Muslimness.” It further defines it as “inciting hatred or violence against Muslims”.
UPI facts
More than 2.2 million Indian tourists arrived in UAE in 2023
More than 3.5 million Indians reside in UAE
Indian tourists can make purchases in UAE using rupee accounts in India through QR-code-based UPI real-time payment systems
Indian residents in UAE can use their non-resident NRO and NRE accounts held in Indian banks linked to a UAE mobile number for UPI transactions
UAE v Gibraltar
What: International friendly
When: 7pm kick off
Where: Rugby Park, Dubai Sports City
Admission: Free
Online: The match will be broadcast live on Dubai Exiles’ Facebook page
UAE squad: Lucas Waddington (Dubai Exiles), Gio Fourie (Exiles), Craig Nutt (Abu Dhabi Harlequins), Phil Brady (Harlequins), Daniel Perry (Dubai Hurricanes), Esekaia Dranibota (Harlequins), Matt Mills (Exiles), Jaen Botes (Exiles), Kristian Stinson (Exiles), Murray Reason (Abu Dhabi Saracens), Dave Knight (Hurricanes), Ross Samson (Jebel Ali Dragons), DuRandt Gerber (Exiles), Saki Naisau (Dragons), Andrew Powell (Hurricanes), Emosi Vacanau (Harlequins), Niko Volavola (Dragons), Matt Richards (Dragons), Luke Stevenson (Harlequins), Josh Ives (Dubai Sports City Eagles), Sean Stevens (Saracens), Thinus Steyn (Exiles)
Company profile
Company: Rent Your Wardrobe
Date started: May 2021
Founder: Mamta Arora
Based: Dubai
Sector: Clothes rental subscription
Stage: Bootstrapped, self-funded
Fund-raising tips for start-ups
Develop an innovative business concept
Have the ability to differentiate yourself from competitors
Put in place a business continuity plan after Covid-19
Prepare for the worst-case scenario (further lockdowns, long wait for a vaccine, etc.)
Have enough cash to stay afloat for the next 12 to 18 months
Be creative and innovative to reduce expenses
Be prepared to use Covid-19 as an opportunity for your business
* Tips from Jassim Al Marzooqi and Walid Hanna
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How to increase your savings
- Have a plan for your savings.
- Decide on your emergency fund target and once that's achieved, assign your savings to another financial goal such as saving for a house or investing for retirement.
- Decide on a financial goal that is important to you and put your savings to work for you.
- It's important to have a purpose for your savings as it helps to keep you motivated to continue while also reducing the temptation to spend your savings.
- Carol Glynn, founder of Conscious Finance Coaching
