BoE Governor Bailey says he still thinks markets are getting ahead of themselves by pricing in rate hikes, according to a Reuters interview
Importance
Level 1
- We will have to act if appropriate but tackling source of energy price shock is most important
- If we have prolonged high energy prices and supply disruption, it will strain many countries “quite seriously”
- I’m very clear we need to return inflation to target in way that causes least damage to growth and jobs
- We look at inflation expectations very carefully, but short-run often follows headline inflation
- Businesses I speak to say they have “a real lack of pricing power”
- UK growth is below potential, labour market softening
- MPC may debate case for a precautionary rate rise, but need to judge that in context of remit and how to return inflation to target
- Gilt market moves “orderly but stretched”, we’re watching it hourly
- Need to watch out for investor loss of confidence in private credit
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