Credibility challenge: Bank of England walks a tightrope on interest rates

Analysis: some want Bank to play catchup on rates; others say it risks engineering conditions for a recession

The Bank of England is facing fierce criticism from both sides over its plans to raise interest rates. For hawkish economists, Threadneedle Street has fallen badly behind the curve, miscalculating the rise of inflationary pressures, and now needs to play catch-up to regain credibility.

Others say the Bank is navigating the most dangerous moment for the economy in decades, but now risks a huge policy mistake. They argue that driving up borrowing costs will have little effect on inflation caused by global supply chain disruption, and that it risks engineering the conditions for a recession in an economy still grappling with Covid-19 and struggling for momentum.