Bank of England Governor Andrew Bailey has firmly rejected suggestions that the central bank has become complacent in its fight against rising prices.
Speaking to CNBC, Mr Bailey expressed dissatisfaction that Consumer Prices Index inflation remains above the institution’s 2% target.
Notably, the Bank of England boss defended the range of opinions within the Monetary Policy Committee (MPC), describing it as a strength rather than a weakness.
The Governor stated: “We’re more complacent. Of course we’re concerned. We’re not complacent at all. It’s perfectly reasonable for people to take different views. Huw Pill does take a different view on that, and he’s quite justified in taking that position.”
The Bank of England has came under fire during Mr Bailey’s tenure
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The Bank’s chief economist Huw Pill had earlier this week cautioned against complacency regarding inflationary pressures, speaking to the Press Association.
Mr Pill highlighted concerns that surging oil and gas prices linked to the US-Israeli war with Iran could push CPI higher.
The rate-setter argued that inflation sitting one percentage point above target ought to be viewed as troubling, stating: “Our mandate is very clear; inflation at two per cent at all times.”
Official data revealed that UK inflation stood at 2.8 per cent in April, unchanged from the previous month, with the Bank forecasting it could climb to 3.2 per cent before the year ends.
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The Bank of England boss is on the defence
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GETTYMr Pill has advocated for raising interest rates to four per cent at the past two meetings, standing alone among the nine committee members in April before being joined by Megan Greene in June’s decision.
Meanwhile, Mr Bailey voted with the majority to maintain rates at 3.75 per cent, reflecting his more cautious approach to tightening monetary policy.
Mr Bailey explained his contrasting stance by pointing to weakening economic conditions in the UK.
He added: “I’m in a somewhat different position. I think it’s frustrating, but I do think that we’re operating against a softer economy at the moment.”
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Notably, Mr Bailey expressed confidence that inflation would eventually return to target, though acknowledged this would take longer than previously anticipated.
The central bank Governor shared: “I’m not happy about the fact that inflation is above target at all, but we do have to judge it in context and looking forward.”
Mr Bailey characterised Britain’s situation as a “negative supply shock” combining elevated inflation with subdued economic activity.
He noted that the Bank’s MPC members will need to exercise careful judgement on the appropriate route back to the two per cent inflation goal.