BoE Criticized for Policy Response to Middle East War

The Bank of England's response to the Middle East war has been criticized by one of its interest rate-setters, Catherine Mann. According to Mann, the central bank made errors in how it framed its policy response to the shock from the war, pushing up borrowing costs in the UK.

Mann said that the rise in market interest rates after the outbreak of the Iran war reflected expectations of higher inflation and possibly a 'monetary policy uncertainty premium.'

This risk premium was attributed to what Mann described as errors in the BoE's initial response in March, when it held interest rates with a message perceived by investors as 'wait mode,' rather than taking necessary action to control inflation.