This month, the Bank of England will celebrate 25 years of independence. For the past quarter of a century it alone, and not Her Majesty’s Government, has been responsible for setting interest rates and controlling the amount of money circulating in the economy.

But this is no time to throw a party or mint a new coin (or even an NFT). With the UK sailing into the teeth of a brutal cost-of-living crisis, the Bank’s leadership would be much better advised to use this milestone to step back, reflect, and jettison some of their very dangerous ideas about inflation and its role in our economy.

The Bank has already failed in its core mission to keep prices under control: according to the Consumer Price Index (CPI), inflation jumped to a 30-year high of 6.2% in February. In light of that, some economic commentators are already calling for a fundamental overhaul of its mission.

However, there is no point in doing this unless and until the Bank’s leadership accept that not only has their response to the crisis been fundamentally mistaken, but that it is actually contributing to the very problem they are meant to be solving. In short, they have defined inflation wrong.

Inflation, properly understood, is an increase in the amount of money and credit circulating in the economy. It is not price rises. These may be a consequence or symptom of inflation, but that is quite different. Yet the Bank itself seems to define inflation in terms of price rises.

This might sound like splitting hairs; after all, it is the cost of goods at the till, rather than the grand economic theory, that understandably preoccupies consumers.

But it is actually fundamentally important. Under the Bank’s definition, its own money-printing interventions are only one contributory factor to ‘inflation’. Under the proper one, they are the root cause of the entire problem.