THE Bank of England’s Governor has insisted the UK will not fall into an inflationary spiral of the type seen in Zimbabwe, as Threadneedle Street prints money on a massive scale.
Andrew Bailey said the Bank would “not hesitate to take all necessary actions” to support British businesses through the disruption while also ensuring inflation remained consistent with its 2pc medium-term target.
He said the Bank was not engaging in “monetary financing” – in which a central bank permanently expands its balance sheet in order to fund the government.
“This type of reserve creation has been linked in other countries to runaway inflation,” Mr Bailey wrote in the Financial Times. “That is because it could undermine a central bank’s ability to control monetary conditions over the medium term.”…
Quite so, the entire point of going through the issuance of bonds that are then bought by BoE is so that, at some point in the future, BoE can sell the bonds into the market, collect the cash created and cancel it.