The BofE reaction to Covid-19 and after - a personal view: Jonathan Haskel

Jonathan Haskel joined the Bank of England's Monetary Policy Committee as an external member in 2018. His spell as an MPC member was an eventful one, including Brexit, the Covid-19 pandemic, Russia's invasion of Ukraine and the LDI (Liability driven investment) crisis of 2022. In this personal account of his actions, he defends the use of the "mainstream" model of inflation forecasting, which places great importance on the state of the labour market. He also pointed out that in 2020, no one had any idea how long the economy would need to be shut down. The MPC liaised closely with the scientific community and were completely blindsided in November when Pfizer-BioNTech announced it had developed a vaccine which was 90% effective against the virus. Only a few days earlier, he had supported a £150billion increase in the BoE's QE programme as the prevailing wisdom had been that new vaccines could take up to 10 years to develop. This was still not the end of the uncertainly faced by MPC members...what if the new variants of the virus were resistant to the vaccine? Another concern was the tightness of the labour market. Although he was not approaching his decision-making as a fully-fledged monetarist, Mr Haskel mentioned that another big concern was the monetary overhang - the amount of unspent money in households' and businesses' accounts. On reflection, he felt that one question which needs to be asked is how money should be integrated into macroeconomic forecasting From the second session of the 2025 IIMR Monetary Conference 'Why were so many economists wrong about inflation in the early 2020s?' that was held at the University of Buckingham on November 12th, 2025.