Sir Mervyn’s misfortune on inflation targets
As Bank of England Governor Sir Mervyn King takes part in his first live television interview, Channel 4 News charts the above-target inflation rates during the latter half of his tenure.
Over the past five years since the start of the financial crisis, the Bank of England has missed its inflation target in 40 out of 60 months. The target of 2 per cent on the CPI measure has been above 3 per cent for the majority of the past decade.
The governor of the Bank of England has had to write 14 open letters to Chancellors Darling and Osborne during this time to explain why inflation veered away from this 2 per cent target. Before that there were none of these letters in 10 years.
Sir Mervyn King was certainly right when he pronounced, in 2007, that it was the end of the “nice” decade – 10 years on “non-inflationary consistent expansion”, underpinned by cheap goods from China and cheap finance from the world credit boom.
It was not just the financial boom that ended in 2007, but the impeccable inflation-fighting record of Sir Mervyn’s Bank of England.