Will Bank of England governor survive Tory pressure to quit?

Legend has it that Andrew Bailey’s wife once faced down a grizzly bear at the family’s holiday home in Idaho. The Bank of England governor may wish to employ his partner to fend off the ferocious Tory MPs now clawing at his door.

Conservatives have certainly tried their best to give Mr Bailey a mauling this week – accusing him of being “asleep at the wheel” in dealing with rising inflation after this week’s grim figures panicked backbenchers afraid of losing their seats.

Former cabinet minister Jacob Rees-Mogg said the governor and his team had “bungled” by being much too complacent on soaring prices in recent years, calling Mr Bailey “chief ostrich” with his head in the sand.

“Too little too late is the reason inflation is now becoming sticky,” said ex-Treasury minister Andrea Leadsom of this week’s 0.5 per cent interest rate hike, adding that there were “lots of questions” about why Mr Bailey had been so behind the curve.

On Sunday, Sir Jake Berry - who was appointed Tory chair by Liz Truss and was previously a defender of her failed economic plans - became the first Tory to publicly question Mr Bailey’s future. The ex-chairman, an ally of Boris Johnson, said “maybe it’s time to look for someone else”, if the governor cannot come up with a better plan than just “ratcheting up the interest rates”.

The Independent understands other critical MPs are on the verge of calling for Mr Bailey to “consider his position” – Westminster-speak for demanding someone quits. One unnamed MP said this week he should be replaced with a “safe pair of hands”.

But at this stage, most Tory MPs remain wary of regime change at the Old Lady of Threadneedle Street. Chastened by last autumn’s mini-Budget fiasco, they know that challenging the independence of the Bank could spook the markets and undermine the idea of steady stewardship of the economy.

Mr Sunak certainly appears unwilling to rock the boat. No 10 faced awkward questions all week about Mr Bailey, refusing to say whether the prime minister believed that Mr Bailey was doing a “good job”. But on Sunday the PM offered his personal backing – saying the governor had a “track record” of managing inflation “appropriately”.

Could the PM change his mind? It seems unlikely. The PM and his chancellor are ultimately in charge of appointing and – if necessary – firing the Bank governor. Mr Bailey agreed to an eight-year term ending in 2028 when he took over, and successive governments have been unwilling to end contracts early and risk greater uncertainty.

As he licks his wounds after a tough week in which the central bank went for broke and hiked interest rates to a 15-year-high of 5 per cent, Mr Bailey can take comfort from the fact that relatively few Tories think it was the wrong thing to do.

Craig Mackinlay says rising interest rates “will not make a blind bit of difference” to inflation and only “add to the pain” faced by mortgage holders. John Baron, a member of the Treasury select committee, called for a pause on any more base rate hikes to see the impact of 13 rises in a row. But at this stage, few Tory MPs have a clear alternative to offer the Bank.

Some part of the anti-Bailey grudge appears slight and petty. The governor and his officials have even been accused by some of “going for woke” by highlighting the Bank’s colonial past.

A government source complained to the Mail on Sunday that the central bank has placed “trigger warnings” in its museum because visitors may find displays about its links to the slave trade “emotional and traumatic”.

Mr Rees-Mogg complained: “The Bank is going for woke, wasting taxpayers’ money and forgetting about inflation. It is not for the independent Bank to adopt political causes, it is there to do a specific job and has failed.”

If the push against Mr Bailey has been reduced to a moan about museum displays, Mr Bailey’s job would appear safe for now. But he must also know that improbable things become possible in tumultuous times. And scapegoats are always useful when the bear poop really hits the fan.