HomeEuropeBank of England's Andrew Bailey tempers talk of pause, pivot in hikes

Bank of England’s Andrew Bailey tempers talk of pause, pivot in hikes

Governor of the Bank of England Andrew Bailey has talked down expectations that the central bank is readying to pause or pivot rate hikes.

Yui Mok | Afp | Getty Images

LONDON — The Bank of England on Thursday talked down expectations that it is readying to pause or pivot rate hikes, noting that there is still some way to go in its efforts to tame inflation.

Governor Andrew Bailey told CNBC that the omission of the word “forcefully” from its forward guidance at Thursday’s Monetary Policy Committee meeting was not a sign that “we’re done” despite seeing an encouraging downward trend in price growth.

“I’m not saying that this is it, we’re done, because the world is too uncertain at the moment,” he told CNBC’s Joumanna Bercetche.

The Bank on Thursday voted 7-2 in favor of a second consecutive half-point rate hike, increasing the main Bank rate to a 14-year high of 4%.

At the same time, it also revised up its economic forecast for the year, predicting a shorter and shallower recession than previously anticipated.

Sterling fell against the dollar and gilt yields tumbled in afternoon trade on speculation that the Bank may be nearing the end of its hiking cycle.

‘An encouraging downward path’

Bank of England still facing the perfect storm, economist says

The U.K. central bank, for its part, expects the economy to shrink 0.5% this year, and upward revision of the 1.5% contraction predicted in December. It then sees the economy declining by a further 0.25% in 2024, compared with the 0.9% uptick forecast by the IMF.

The Bank of England’s rate hike follows similar moves by other major central banks this week as policymakers continue their efforts to quell still high inflation.

The European Central Bank voted earlier Thursday to raise rates by 50 basis points and the U.S. Federal Reserve moved Wednesday to increase rates by 25 basis points.

However, Bailey insisted that the Bank’s policy decisions would not be influenced by those of other central banks.

“We do not coordinate monetary policy in that sense across central banks because we’re each setting monetary policy for our particular setting,” he said. “We have to set interest rates for the U.K.”

Watch CNBC's full interview with Bank of England Governor Andrew Bailey
RELATED ARTICLES

LEAVE A REPLY

Please enter your comment!
Please enter your name here

New Updates