Rising Inflation Blamed on Central Banks
Numerous politicians and analysts have attributed the recent inflation surge to the vast amounts of money created by the BoE and other central banks since the 2008 financial crisis and throughout the COVID-19 pandemic.
UK Inflation Reaches 40-Year High
In October, British consumer price inflation reached its highest point in over 40 years at 11.1%, with the most recent data for March maintaining rates above 10%.
Pandemic and Geopolitics as Key Factors
According to Broadbent, the recent inflation increase is more likely due to supply chain disruptions caused by the pandemic and the surge in natural gas prices following Russia's invasion of Ukraine in 2022 rather than money supply.
Economists Criticize Central Banks
Some economists have accused the BoE, U.S. Federal Reserve, and European Central Bank of overlooking warning signs from increased money supply indicating a rising inflation risk.
Money Supply Contextualization
Broadbent emphasizes that the BoE does not disregard the money supply but stresses the importance of considering it in context with other economic variables. He also differentiates between quantitative easing and the "helicopter drop" of money in economic texts.
Lack of Evidence for QE-Inflation Link
Broadbent concludes that evidence does not support the strongest claims suggesting QE inevitably leads to excessive inflation.
