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BoE's priority is to fight the inflation.

 

Boe
In a speech at the Lon­don School of Eco­nom­ics, Bailey stressed the UK fin­an­cial sys­tem was «resi­li­ent, with robust cap­ital and liquid­ity pos­i­tions, and well placed to sup­port the eco­nomy». However, he made no ref­er­ence to the pos­sib­il­ity that lend­ing might be cur­tailed, instead reit­er­at­ing the BoE’s pos­i­tion that interest rates would need to rise fur­ther if «any signs of per­sist­ent infla­tion­ary pres­sures» were detec­ted. « If they become evid­ent, fur­ther mon­et­ary tight­en­ing would be required,» he said. In ques­tions after his speech, Bailey insisted that noth­ing had recently happened in fin­an­cial mar­kets to make the nine mem­bers of the Mon­et­ary Policy Com­mit­tee, who set the base rate, act in ways to soothe ten­sions.

«Mon­et­ary policy has to take into account credit con­di­tions. » Bailey’s speech focused mainly on the import­ance of con­sid­er­ing the abil­ity of the eco­nomy to sup­ply goods and ser­vices without gen­er­at­ing infla­tion when set­ting mon­et­ary policy. He said the main prob­lem the BoE faced, as the peak of the pan­demic passed in 2021, was strong spend­ing com­bined with a weaker than expec­ted sup­ply of labour. Coupled with strains in global sup­ply chains and Rus­sia’s full-scale inva­sion of Ukraine, Bailey said this trend had caused infla­tion to hit double-digit rates not seen for 40 years.

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  1. Patrick28 March 2023 at 13:03

    We've got double-digit rates not seen for 40 years because of Russia's invasion of Ukraine, because of Covid and let's not forget Brexit. One of these would have been plenty but 3 at once? That's way too much for any economy

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