BoE risks policy mistake and loss of credibility: Investec AM

Investec Asset Management head of global interest rates Russell Silberston comments on the risk of a Bank of England policy mistake ahead of tomorrow's inflation report.

In the story of the boy who cried wolf, the shepherd boy lost credibility because the villagers no longer believed his exclamations. As inflation continues to breach target and the Bank continue to shout ‘don't worry'. We believe that not only may there be a serious risk that their credibility is increasingly questioned, but also that a policy mistake could be made. The Bank of England's Monetary Policy Committee is mandated to deliver price stability to the UK economy. This is defined by the government as an annual growth rate in the Consumer Price Index (CPI) of 2%. The Committee...