BoE is like a mad dog chasing its tail – rate hike will come back to bite us all

BoE governor Andrew Bailey helped bring the inflationary nightmare upon us, by claiming it would be “transitory” when others were warning of something much more serious. He was merrily pumping out yet more monetary stimulus in November 2020, just as consumer price growth took off like a space rocket.

He then lost control of soaring prices while looking around for somebody else to blame instead.

I could write a book on the mistakes Bailey has made. Instead I limited myself to these five humongous errors.

After being too soft on inflation for too long, Bailey and the BoE’s rate-setting monetary policy committee (MPC) have finally shown their teeth.

The trigger was yesterday’s disastrous consumer price inflation figure for May of 8.7 percent, which followed April’s equally shocking number.

The bank is clearly trying to engineer a recession, as it sees this is the only way to defeat today’s inflation monster.

In doing so, Bailey is using a generation of homebuyers as cannon fodder, mostly younger buyers who jumped on the ladder when base rates were close to zero and BoE forward guidance suggested they would stay there.

Make no mistake, today’s rate hike is a disaster for homeowners, and the housing market.

So far, the impact of Bailey’s base rate hikes has been reduced because 7.5million homeowners are protected by two and a five-year fixed rate mortgages.

Of these, 1.5million will expire this year, and another million next.

Eventually, they all will be flung into today’s hellish mortgage market, and their monthly repayments will rocket as a result.