BoE Governor Andrew Bailey said in an interview published over the weekend that the risks to the UK economy are “two-sided” at the moment. He said that “activity in the economy is slowing”. Also, “he proximate cause of many of these inflation issues is on the supply side, and monetary policy isn’t going to solve these directly”.
However, “the concern for us is what they classically call ‘second-round effects’, particularly in wage bargaining and the labour market,” he added. “If the economy evolves in the way the forecasts and reports suggest, we’ll have to raise rates. Which, by the way, is entirely consistent with what I said in October.”
