BoE Governor Andrew Bailey reaffirmed today that the UK remains on “gradual disinflation” path, noting that the lingering effects of past economic shocks are slowly fading.
However, he emphasized that risks are “two-sided,” as highlighted in the BoE’s latest minutes, where differences within the committee surfaced.
On Q4 GDP data, which came in stronger than expected, Bailey downplayed its impact, stating that the economy has been “quite static” since late spring 2024.
Regarding the US government’s evolving stance on tariffs, Bailey expressed concerns about economic fragmentation, warning that such shifts could harm global growth.
However, he acknowledged that the inflationary impact from tariffs remains “ambiguous,” as it depends on factors such as “redirection of trade” and retaliatory measures.
He reiterated that risks exist on both sides, justifying the BoE’s use of “careful” alongside “gradual” in its policy guidance.
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