BOE Bailey

Bailey at the Treasury Select Committee:

  • Need to keep inflation pressure from labor market in mind, that influenced my thinking on Dec rate hike
  • Some aspects of inflation outght to be transitory
  • The tightness of the labor market is the first, second and third thing businesses want to talk to me about
  • We don't know if older workers will come back or retire
  • It's tough to strip out effect of covid and Brexit from labor market size
  • We are seeing some evidence of second-round inflation effects
  • There is an argument that higher inflation could retrain demand in the economy and bring inflation back down
  • Our view of QE is that it works much better in some places than other, particularly in places with large financial markets
  • It's reasonable to think that effect of quantitative tightening in symmetric

Bailey was careful to say that he didn't want his comments -- particularly speculation on inflation dynamics -- to indicate how he will vote on rates.