Bank of England policymakers speak after rates held at 5.25 per cent
The Bank of England took another step towards lowering interest rates on Thursday, as a second official backed a cut and Governor Andrew Bailey said he was “optimistic that things are moving in the right direction”.
Below are comments from a news conference with BoE policymakers:
BAILEY ON CUTTING BANK RATE BEYOND MARKET EXPECTATIONS
“It’s likely that we will need to cut bank rates over the coming quarters and make monetary policy somewhat less restrictive over the forecast period, possibly more so than currently priced into market rates.
“This will be consistent with ensuring that inflation does not fall noticeably below target at the end point of the forecast.”
BAILEY ON RESTRICTIVE POLICY
“One cut, we’re probably assuming it’s a small cut obviously, would still leave us with restrictive monetary policy.”
BAILEY ON A POSSIBLE RATE CHANGE IN JUNE
“Before our next meeting in June, we will have two full sets of data for inflation activity and the labour market and that will help us in making that judgement afresh, but in saying that, Let me be clear, a change in Bank Rate in June is neither ruled out nor a fait accompli.”
BAILEY ON A RETURN TO MORE NORMAL TIMES:
“(The) absence of data surprises is an indication that we’re now getting back to more normal times, at least compared to the highly unusual period we’ve been living through with a global pandemic and a major war in Europe.
“Risks to the global economy remain including from the conflicts in the Middle East. But so far, economies have adjusted to withstand those risks.”
BAILEY ON INFLATION:
“Inflation has now fallen to just about 3 per cent and we expect it to be close to the target in the coming months. That’s encouraging.”
“The inflation dynamics of the UK, are different to the US. The US is facing a different situation. It’s got stronger demand, and therefore I think it is important to make that distinction.
“I think we’ve seen some response in markets to that of late where there have been some, some movement, some decoupling.”
BEN BROADBENT ON INFLATION:
“For my part, I probably look a little more closely at services inflation than wages, at least over very short periods of time.”