BoE’s Bailey: Scale of real income shock will cause slowdown in UK growth

Western countries should not appease Russia following its invasion of Ukraine even if there are difficult economic consequences, Bank of England Governor Andrew Bailey said on Thursday. “What Russia is doing in Ukraine is appalling,” Bailey said at a discussion in Washington hosted by the Peterson Institute for International Economics.

“My view – and I’m a central banker, not a politician – is that there should be no appeasement of Russia because we have to deal with economic problems as a consequence,” he added. Bailey, along with top US and Canadian officials, walked out of a G20 meeting in Washington on Wednesday when a Russian delegate spoke.

Bank of England Governor Andrew Bailey has been talking about the state of and outlook for the UK economy. Here are the key takeaways from his remarks.

Additional Remarks:

The UK’s inflation shock has more in common with the Eurozone than the US.

Quite a few businesses have been talking about a shortage of migrant labour.

“We are in a period of unprecedentedly large shocks”.

“We must ask whether series of price shocks is affecting inflation expectations”.

The question is whether the UK labour market will slow down.

The BoE is looking to see whether businesses intend to hoard labour.

The inflation target is going through the most severe test since it was created.

Short-run inflation expectations are increasing and this is not a surprise.

“We are seeing some increase in medium-term inflation expectations, but this does not amount to a de-anchoring”.

“We must not be complacent about inflation expectations”.

“We must not be complacent about inflation expectations”.

“We are walking a very tight line between tackling inflation, and the output effects of real-income shock”.

Western countries should not appease Russia following its invasion of Ukraine even if there are difficult economic consequences, Bank of England Governor Andrew Bailey said on Thursday.

“What Russia is doing in Ukraine is appalling,” Bailey said at a discussion in Washington hosted by the Peterson Institute for International Economics. Bailey, along with top US and Canadian officials, walked out of a G20 meeting in Washington on Wednesday when a Russian delegate spoke.