“The Bank of England should end its asset purchases now”: IEA expert comments on ONS inflation figures

16 Jun 2021 01:21 PM

Julian Jessop, Economics Fellow at free market think tank the Institute of Economic Affairs, responded to consumer price inflation figures published by the Office for National Statistics, which show inflation has jumped to 2.1 per cent 

“The jump in inflation in May is another warning of the dangers of pumping even more money into an economy that is already growing strongly. The Bank of England should end its asset purchases now, while the Chancellor must continue to resist calls for more government spending and borrowing.

“The year-on-year increase of 2.1 per cent in the CPI was larger than most had expected, including the Bank of England, and sets inflation on course for at least 3 per cent later in the year. A small and temporary overshoot of the official target of 2 per cent would be acceptable, and perhaps even desirable. However, inflation has a habit of sticking around and hits the poorest in society the hardest.

“Some of the price pressures are transitory, but even these are stronger than anticipated — and they are not being offset by lower inflation elsewhere. This is a classic example of too much money chasing too few goods, and services.”

Notes to Editors

For media enquiries please contact Annabel Denham, Director of Communications, 07540 770 774

IEA spokespeople are available for interview and further comment.

Further IEA reading:

• Inflation: The next threat? by Dr Juan Castaneda and Professor Tim Congdon
• Modern Monetary Theory: Why it can’t provide sustained economic growth and low inflation by Dr Juan Castaneda

Consumer price inflation, UK: May 2021