Former BOE official says bond purchases have been overdone during pandemic

A former Bank of England policymaker said the central bank resorted to quantitative easing during the pandemic without properly assessing whether it was needed.

Gertzen Willighe draws a key difference between the £450 billion ($545 billion) program launched in response to the Covid crisis and the recent BoE intervention to calm bond markets after former prime minister Liz Truss’ unfortunate fiscal loosening Make.

“It was very clear that they were buying the lowest amount needed to achieve some stabilisation,” he told a conference in London on Thursday. Bought in bulk without response from the market. We just kept doing it, and kept doing it.”

His comments echo those of BOE chief economist Huw Pill, who suggested earlier this month that continuing with stimulus during the pandemic was a mistake and contributed to the current skyrocketing inflation rate. Peel was not a member of the Monetary Policy Committee at the time.

Vlieghe, a member from 2015 to 2021, said the central bank had probably gone too far in its QE efforts. “In retrospect, we waited too long to say that now that the markets are stable enough, you no longer need to buy in such large quantities.”

Vlieghe also accused Truss and his team of setting the stage for market turmoil in September and October by attacking the BOE and the Office of Budget Responsibility, the UK’s fiscal watchdog, during the Conservative Party leadership campaign.

“He spent the summer brutally undermining the independence of the Bank of England and the OBR, and made a lot of noise saying that the mandate of the Bank of England was not fit for purpose and that the government needed to have more say on how Things happen,” he said. “He was very unhelpful.”

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