BoE’s Bailey surge in unemployment unnecessary on tackling inflation

BoE Governor Andrew Bailey expressed a more positive stance on the UK’s inflation scenario compared to a year ago, particularly regarding the potential for “second round effects” to drive further price surges.

At a panel discussion at the Bank of Italy Symposium, he noted there is “very limited evidence so far” that an uptick in unemployment is a prerequisite for reigning in inflationary pressures.

Bailey highlighted the UK’s labor market status, pointing out that the country is near or at full employment. “It doesn’t get a lot of comment, but we have seen very limited evidence so far of an increase in unemployment as a sort of necessary condition of reducing inflation,” he added.