The world’s central banks made a “mistake” during the coronavirus lockdowns by printing more money, which is now the cause of soaring inflation rates, former Bank of England governor Mervyn King says.
King said there was a need for politicians to “front up” and explain the effects of soaring inflation, the reduction in living standards caused by confronting Russia’s invasion of Ukraine, and help future generations cope with the increased national debt. King was responding to a crisis in British politics brought on by the Truss government’s promises of billions of pounds in unfunded spending.
Despite pointing out that this was also happening overseas, he said that mortgage rates are “definitely going to go up” in Britain. During the lockout, he claimed that all central banks “made the error” of “believing that they should print a lot of money to help the economy.”
King claimed that “all central banks in the West” had failed to carry out their responsibility to contain inflation and had developed the habit of producing money whenever there was bad news.
“During COVID, when the economy was actually contracting because of lockdown, central banks decided it was a good time to print a lot of money,” he told the BBC. “That was a mistake. That led to inflation. We had too much money chasing too few goods. And the result was inflation. That was predictable. It was predicted, and it happened.”