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Income shocks will push UK into recession, says BoE chairman

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Income shocks will push UK into recession, says BoE chairman

Bank of England (BoE) Governor Andrew Bailey said on Tuesday (29) that income shocks will push the UK into recession. The central banker commented that the market for Gilts, as bonds issued by the British government are known, has not yet returned to normal and that, therefore, he prefers to observe what happens to updated sales before deciding on next year’s program.

Bailey also highlighted that there is no reason why BC cannot reduce the Gilt portfolio by 80 million pounds in 1 year.

He also spoke this Tuesday at the UK Lords’ Committee on the mini-budget proposed by the government of Liz Truss, former prime minister.

According to Bailey, the BoE was not aware of the plan and there was no discussion with the government about the BoE’s asset sales pace.

Furthermore, he stated that the purchase of long-term Gilts, as a response to Truss’ fiscal plan, cannot be considered a form of monetary easing.

The central banker also stressed that, at the moment, there is no reason to change the rates of return on reserves.

Source: CNN Brasil

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