Economists warn low interest rates will fuel inflation

This is Money features comments from the IEA

Economists have attacked the Bank of England’s low interest rates and forward guidance policy, claiming it will fuel inflation and boom and bust.

The criticism has arrived as the Bank’s monetary policy committee prepares to deliver its September base rate decision this week, which is all but certain to be a continued hold at the record low 0.5 per cent.

Members of the shadow monetary policy committee, of think tank the Institute for Economic Affairs, say forward guidance is not just based on a flawed model but has also seen money market expectations head in the opposite direction to that desired, the Sunday Times has reported.

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