Following its policy meeting in August, the Bank of England declared that it has increased the policy rate by 25 basis points (bps), to 5.25%. This choice was consistent with what the market anticipated. Haskel and Mann, two policymakers, voted in favour of a rate increase of 50 basis points, while Dhingra voted to maintain interest rates unchanged. The Bank of England maintained in its policy statement that it would make sure the bank rate remained “sufficiently restrictive for sufficiently long” to bring inflation back to the target level.
Andrew Bailey press conference
“We expect inflation to fall to around 5% in October.”
“More gradual pass-through of energy price falls explains the difference between UK and Eurozone CPI.”
“Less clear how fast non-energy prices will come down.”
“Food and drink inflation appears to have peaked.”
“Services price inflation brings unwelcome news since May.”
“We should not read too much into this, services price inflation reflects volatile elements.”
“Continued strength in services price inflation may suggest high inflation will persist.”
“Pay growth is notably stronger than standard models would suggest.”
“Upside surprises on wage inflation suggest that it will take longer for second-round effects to fade.”
“Evidence is clear that higher bank rate is having an impact.”
“I will not judge what the path of BoE rates will be.”
“More than one path for rates may deliver inflation back to target.”
“We will judge what is most appropriate path for rates based on evidence.”
“Relative to May, more of the risk we saw has crystallised.”
“Projection for economic activity has weakened since May.”
“Key question is what confidence we have of wage demands following inflation expectations lower.”
“Pay element of labour market has not softened, unlike other elements.”