The Bank of England sold £24.8 billion of bonds in the first three months of this year just to force up interest rates

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The media is concentrating on the  supposed efforts being made by the Bank of England to control inflation but which are actually intended to increase interest rates to the point where they are at their highest level since before the 2008 global financial crisis.

I am not in the slightest bit convinced that the Bank of England now has any serious objective with regard to the control of inflation. They admit that their models don't work when it comes to forecasting what inflation might be.

They are very obviously not succeeding in exercising any control, which is unsurprising when the tools available to them are wholly unsuited for the task, but they use them, nonetheless.

The obvious conclusion to draw as a result is that they are either incompetent, or have another agenda. I am going to be generous and will assume that it is the second of these two options. The real agenda is to increase interest rates, come what may.

There is very strong evidence to support that hypothesis. I only had to look at the quarterly report of the Bank of England Asset Purchase Facility, which manages the bonds acquired by the Bank of England under the quantitative easing programme to find this data:

That table shows the value of assets acquired by the APF at 31 December 2022.

By 31 March 2023, the table look like this, using the same headings::

Over that quarter the APF sold £5.8 billion of private sector bonds and £19 billion of government bonds.

The intention of these sales - and most especially the gilt sales - which did nothing to help fund the government - was to suppress the price of gilts in  financial markets. And as anyone who is familiar with financial markets will know, the interest rate earned on a gilt at a moment in time moves inversely to its price, so if the Bank of England is selling significant quantities of gilts  on top of these the government already thinks it needs to sell to supposedly finance its day-to-day activities then  the result is that the interest rate is forced upwards.

There was no reason for the Bank of England to seek gilts at this moment. It could just as easily have held onto those gilts until markets were calmer. But it sold them anyway knowing that to do so would help achieve its objective of pushing rates upwards, where it has every intention that they should stay.

And then we get headlines like this in the Guardian:

The Bank must be delighted. They will be even more pleased that a supine Chancellor has said that he will support all their plans.

I think this is class warfare. This recession will hardly touch the rich. Many will see their real incomes rise. The majority in the country will suffer. What other conclusion can I come to when this crisis is being manufactured quite deliberately and wholly unnecessarily by the Bank to impose devastation on millions?

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