The business secretary refused repeatedly to comment on whether the Bank of England was correct in signaling the end of its market intervention.
Jacob Rees-Mogg has expressed trust in the Bank of England governor, but he disputes that pension funds are at “systemic” risk.
The business secretary stated that he had full faith in Andrew Bailey and referred to him as “respected.”
However, he questioned whether there was a “systemic problem” with pensions after the Bank of England widened its market involvement to aid pension funds by purchasing index-linked gilts for the second time in two days on Tuesday.
The Bank had warned that “fire sales” of assets posed a “material risk to the UK’s financial stability” if no action was taken.
The business secretary stated that pension funds “are not at risk” on the whole, but that “certain pension funds have made high-risk investments.”
He said that the “properly autonomous” Bank had intervened to safeguard these “risky investments.”
Yesterday, the Bank indicated that its emergency support operation to safeguard pension funds will conclude this week.
Mr. Rees-Mogg consistently declined to comment on whether the Bank’s decision to announce the end of its market intervention was appropriate.
He stated, “I will not criticize the Bank of England or its governor.” It is not my place to speculate on the Bank of England’s actions.
He also asserted to Kay Burley that portions of the economy were in “excellent shape,” even though his mortgage payments have increased due to the recent economic turbulence.
“Mortgage rates have increased for everyone with a mortgage, including myself,” he remarked.
All adjustable-rate mortgages have increased.
“Be cautious with forecasts”
New Office for National Statistics data released this morning suggested that the GDP contracted by 0.3% between July and August, a decline from the previous month’s downwardly revised increase of 0.1%.
Mr. Rees-Mogg advised prudence in their interpretation.
“The prior quarter’s data indicated a decline but was later amended to reflect economic expansion. Therefore, exercise extreme caution when interpreting numbers immediately after their release “he told.
It’s a small portion of a vast economy, but these figures are notorious for being altered after the fact.
The business secretary also declined to state his opinion on whether benefits should increase in tandem with inflation, a contentious subject within the Conservative Party.
“We have not yet received the inflation rate that will be used to calculate benefits. Therefore, this will be determined once the number is available “he remarked.
“The majority of predictions and economic forecasts are erroneous rather than accurate. Therefore, one must be cautious with forecasts.”
Routine determination making
Mr. Rees-Mogg stated that a decision regarding benefits will be taken once inflation data became available.
He stated, “There is a procedure for making this decision.”
“The statutory document must be filed in November for the increase to take effect. This will be completed in the usual manner. This is entirely regular government action.”
Tuesday in the House of Commons, former cabinet member Julian Smith cautioned chancellor Kwasi Kwarteng against balancing tax cuts “on the head of the poorest people in our society.”
The administration has already had to shelve its intentions to eliminate the 45p rate of tax due to the possibility of a revolt.
Tuesday, the International Monetary Fund issued a warning that Mr. Kwarteng’s package of unfunded tax cuts made it more difficult for the Bank to rein in surging inflation rates.
The Institute for Fiscal Studies has told the chancellor that he will need to find £60 billion in cuts to public spending if he continues with his tax plans.
When asked by reporters on Wednesday what will occur after the Bank ceases purchasing bonds on Friday, the chancellor responded, “Well, that’s a problem for the governor.”
