Bank of England Governor Andrew Bailey he said in testimony before the House of Commons Treasury Committee that he is not at all happy with the outlook for inflation and that it is a bad situation, Reuters reported. However, Bailey added, more than 80% of the UK’s excess inflation is due to energy and tradable goods.
It is accepted practice to accommodate supply shocks when they are transitory and to focus on second-round effects, Bailey added, adding that he does not reasonably think they could have done anything differently on monetary policy. Bailey highlighted the weakness of the latest activity data from China when discussing the impacts on the global economy.
It is not out of place to describe the impact on demand patterns in the UK as “transitional”, unlike in the US. Bailey noted that the scale and persistence of the UK workforce slump is very unusual.
Source: Fx Street
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