BoE’s Bailey says he is very uneasy about inflation

FILE PHOTO: Bank of England press conference
FILE PHOTO: Bank of England Governor Andrew Bailey in London, Britain February 25, 2019. Kirsty O'Connor/Pool via REUTERS

November 15, 2021

LONDON (Reuters) – Bank of England Governor Andrew Bailey and other top officials from the British central bank spoke to lawmakers on Monday about their decision earlier this month to keep interest rates on hold and their latest thinking on the economy.

GOVERNOR ANDREW BAILEY ON INFLATION

“I’m very uneasy about the inflation situation…I want to be very clear on that. It is not of course where we wanted to be, to have inflation above target. On the decision itself, however, it was a very close call in my view.”

BAILEY ABOUT ON SIGNALS FROM LABOUR MARKET

“The anecdotes suggest the transition out of the furlough scheme has not raised unemployment but we don’t really know the full story… The OBR forecast has a much larger upturn in unemployment as a result of the end of the furlough scheme than our forecast does… That shows you there’s a lot of uncertainty around it in a way… I think that the situation is looking considerably tighter…”

BAILEY ON PERCEPTIONS THE BOE WOULD NOT ACT ON INFLATION

“It concerned me that there was a view that, whatever we say, that the actual reality was that we were doing something different, in a situation where … inflation was rising and is above target.”

BAILEY ON HIS RECENT MESSAGES TO MARKET

Bailey said he had never said the BoE would raise rates at its November meeting. “But as a point of guidance, in terms of re-emphasing the primacy of the inflation target and the link to medium-term inflation expectations, I thought it was critical that we put our foot down at that point because I am concerned that there is a view in some quarters that we’ve gone off that and just sort of never admitted it. It’s not true.”

(Reporting by Andy Bruce, David Millken and William Schomberg)