Bank of England Acknowledges Persistent Inflation Forecast Errors

The Bank of England has admitted it has consistently underestimated inflation and wage growth since 2022, with forecasts proving repeatedly too low. Officials acknowledged that the central bank's understanding of the labor market was a "relative weak spot," criticizing the Office for National Statistics (ONS) for delayed data revisions. These findings, detailed in the Bank's first-ever forecast evaluation report, come amid criticism of Governor Andrew Bailey's leadership during rising energy prices post-Russia's invasion of Ukraine. The report highlights that inflation has been nearly two percentage points higher than predicted since mid-2021, while wage growth exceeded forecasts by three percentage points on average. Separately, the Bank attributed part of the rise in long-term borrowing costs to reduced purchases of its debt by pension funds. This exposure to global market volatility could impact Britain's already substantial £2.9tn national debt, as financial markets charged interest rates above 5% on 20-year gilts for most of last year. [Publication Time: 2026-01-23 19:42 UTC]