BoE Chief Bailey Says Markets Underestimating Persistence Of Inflation
November 21 2023 - 3:51AM
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Bank of England Governor Andrew Bailey said that financial
markets are putting too much weight on the current data releases
and underestimates the persistence of inflation. At the Treasury
Select Committee hearing on Tuesday, Bailey said the decline in
inflation was good news.
Inflation will end the year a bit lower than the central bank
estimated, the BoE Governor told lawmakers.
However, Bailey said the central bank is concerned about the
potential persistence of inflation in the course of its journey
down to the 2 percent target.
Regarding suggestions on raising the inflation target to 3
percent, Bailey said it is a very bad argument. He asserted that
the target should remain at 2 percent.
At the November policy meeting, the Monetary Policy Committee
decided to maintain the bank rate at 5.25 percent in a split vote.
Policymakers Jonathan Haskel, Catherine Mann and Megan Greene had
called for a quarter point rate hike.
At the hearing, MPC external member Catherine Mann said tighter
monetary policy will be needed both to reduce inflation itself as
well as to align inflation expectations with the remit.
"While I acknowledge that the monetary policy stance has started
becoming restrictive, it is so only recently and not by so much,"
Mann added.
MPC member Dave Ramsden said, "Given my assessment of the
outlook and the risks I would not rule out having to raise bank
rate further in the future but I will continue to make my decisions
on a meeting to meeting basis."
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