The Governor of the Bank of England, Andrew Bailey, has told MPs that he is ‘very uneasy’ about the inflation outlook and that whilst he voted to maintain interest rates at 0.1% at last month’s meeting, to the dismay of many, it had been a very close call. At that meeting the Bank’s monetary policy committee (MPC) voted 7-2 to keep the rate on hold, however he made it abundantly clear he could change sides next month.
‘I’m very uneasy about the inflation situation’ Bailey said, adding ‘I want to be very clear on that. It is not, of course, where we wanted to be, to have inflation above target. On the decision itself, however, it was a very close call in my view’. With regards to the next meeting, he said ‘All meetings are in play’ as they ‘are in the price stability business’.
Bailey justified his decision to stay put on interest rates as the lack of data as to what would happen to around 1 million workers who were still on the government's furlough scheme that ended in September had made him want to sit on his hands rather than jump the gun. Now he believed that the labour market is looking ‘considerably tighter’ and that the end of the furlough scheme had not led to rise in unemployment.
He also spoke about his ‘unreliable boyfriend’ tag that he has inherited from his predecessor, Mark Carney, for his inability to communicate with markets. He said neither he nor any other BoE committee members had ever promised a November rate rise. ‘I thought it was critical that we put our foot down at that point’ he said, adding ‘It concerned me that there was a view that, whatever we said, that the actual reality was that we were doing something different’.