LONDON (Reuters) – Bank of England Governor Andrew Bailey and other top officials from the British central bank spoke to lawmakers in parliament on Wednesday, a month after the BoE raised interest rates for the 14th time in a row to try to curb high inflation.
Below are quotes from Bailey and his colleagues in a question-and-answer session with parliament’s Treasury Committee.
BAILEY ON INFLATION:
“When I look at it today, many of the indicators are now moving as we would expect them to move and are signalling that the fall in inflation will continue and as I’ve said a number of times I think will be quite marked by the end of this year.”
“I should say possibly that we will get a tick up in the next release because fuel prices went down in August last year and went up a bit in August this year … but I don’t that as a central change in the path.”
BAILEY ON WAGE BARGAINING:
“Wage bargaining of course, is one thing but it has surprised us the other way in recent months.”
“And the question now is as headline inflation comes down … will we see inflation expectations continue to come down? … and will that be reflected into wage bargaining?”
BAILEY ON GROUP THINK:
“If you look at the voting pattern of the MPC (Monetary Policy Committee), I don’t think you would really conclude that there was group think in the MPC.”
BAILEY ON RATES:
“I think we are much nearer now to the top of the cycle. And I’m not therefore saying we’re at the top of the cycle because we’ve got a meeting to come but I think we are much nearer to it on interest rates on the basis of current evidence.”
“There was a period where it seems to me it was clear that rates needed to rise going forwards and the question for us was how much and over what time frame, but we’re not I think in that phase anymore, and that’s why we shifted our language to being much more evidence and data driven … we also introduced in August very deliberately the point that we think policy is now restricted in its impact.”
BAILEY ON ‘DEBANKING’:
“I make this point very deliberately, but I don’t take sides, it is unacceptable to close bank accounts on the basis of people’s politics.”
BAILEY ON WOKE:
“I really have no time for getting into the woke debate, whatever woke means, I don’t really know what it means.”
BOE DEPUTY GOVERNOR JON CUNLIFFE ON INFLATION:
“We’re getting mixed signals now. We’re still getting strong pay growth and service price inflation, but we’re also starting to see some cooling in the labour market and that will be the kind of discussion going forward.”
CUNLIFFE ON LABOUR MARKET:
“We’re still seeing in my view anyway quite a slow cooling of the labour market. And those, I call the multiplicative, but those pressures on pay, those nonlinearities which we saw as a risk, and now we think have crystallised are coming through.”
CUNLIFFE ON BUSINESS INVESTMENT:
“We’re seeing, I think, businesses slowing investment decisions because interest rates are higher. So the hurdle rate for investment is higher and going into this period, one of the channels through which monetary policy works is it slows investment and it slows business activity.”
CUNLIFFE ON LENDING TO SMALL BUSINESSES:
“We are seeing some evidence … that within the SME sector … demand for lending is going up a little bit and supply of lending may be constricted.”
(Reporting by Farouq Suleiman and Suban Abdulla, editing by Kylie MacLellan)
