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Haldane: Bank of England printed money for too long, and recession’s 50:50

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The Bank of England has been criticised for persisting with quantitative easing too long

The Bank of England’s former chief economist has said Threadneedle Street persisted “a little longer than we needed to” with quantitative easing – helping to fuel inflation. 

The Bank’s Monetary Policy Committee expanded its quantitative easing programme – effectively, printing money to buy government debt – by £450bn in 2020 and 2021 as the country battled with Covid-19. 

But in an interview to be aired tonight, Andy Haldane, who stepped down in April 2021, admits that the Bank “went on printing money for a bit longer than it needed to. 

“With the benefit of hindsight… we probably did a little bit too much for a little too long,” he told Sophy Ridge in an interview for her Politics Hub show on Sky News. 

The Bank stopped buying bonds in late 2021 and is now actively selling them. 

“At the time of Covid-19, (it was needed) to protect jobs and to protect households and to protect businesses,” Haldane – now the chief executive of the Royal Society of Arts – said.

“But did we persist with that a little longer than we needed to? And did (the Bank of England) step on the brakes a little too late – and therefore a little harder now than they needed to?” 

Wonks at the central bank have been criticised for failing to move fast enough at the beginning of an inflationary cycle that continues to this day, and there are now questions about whether more than a dozen interest rate hikes in a row will effectively strangle growth as that wave of price hikes dissipates. 

Haldane was regarded as the most hawkish of MPC members, pushing for rate hikes before Governor Andrew Bailey. 

Haldane also warned that a “pancake-like” economy that has flatlined for 18 months means the UK is “stuck.”

He rated the risk of recession as “evens” and said “it would take only the tiniest of tilt for us to enter recessionary territory.” 

Last week revisions to official data suggested the UK economy had grown more than expected in the aftermath of the pandemic.

However the respected economist said the upward revisions didn’t change “the story” of the economy, with inflation biting into disposable income.

Andy Haldane’s interview will be shown on the Politics Hub with Sophy Ridge on Sky News at 7pm this evening