LONDON – Bank of England Governor Andrew Bailey and other top officials from the British central bank spoke to lawmakers on Wednesday about their decision earlier this month to raise interest rates in response to rising inflation.
GOVERNOR ANDREW BAILEY ON INFLATION UNCERTAINTY
“It’s not just wage setting, it’s also price setting…it’s both. There is very clearly an upside risk there. The upside risk…comes through from the second-round effects.”
“The second-round effects are a real concern. If we get the second-round effects… of course we would need to react to that with higher interest rates… And the consequence of that, I have to point out, and I know I’m unpopular for saying these things, is that it would of course slow activity in the economy and it would increase unemployment”
BAILEY ON HIS CALL FOR RESTRAINT WITH PAY RISES
“I’m not saying people should not take pay rises. I did make the point earlier it was in the context of large pay rises.
My concern is the second-round effects. If everybody tries to get ahead of the shock that we’ve had from outside…then we’ll get the second-round effects and it will get worse.”
BAILEY ON MPC’S DIFFERENT VIEWS ON RATES
“It’s important not to put too much emphasis on…whether we took a different view on the level that we expected to get to as opposed to the pace by which we get there.”
MPC MEMBER JONATHAN HASKEL ON HIS VOTE FOR 0.75% BANK RATE
“I have to stress it’s a very uncertain situation and it’s a very, very finely balanced decision.”
(Reporting by Michael Holden and James Davey)
