Monday, June 5, 2023
HomeEconomyBoE's Bailey urges firms to assume low inflation when setting prices

BoE's Bailey urges firms to assume low inflation when setting prices

David Milliken

LONDON (Reuters) – Bank of England Governor Andrew Bailey said on Friday that British businesses were setting Prices should take into account official forecasts showing that inflation will fall this year.

“When companies set prices, I know they have to reflect the costs they face,” Bailey told the BBC.

“But what I’m trying to say, come on, is that when we set prices in the economy and people expect it, we do expect inflation to drop significantly this year. I just want to say, remember This,” he said.

Bailey went on to say that he has no evidence that the company is raising prices unnecessarily.

Bank of England hikes key interest rate to 4.25 )% from 4% on Thursday, a day after official data showed consumer price inflation in February The annual rate unexpectedly rose to 25.4%.

Bailey reiterated that the central bank expected inflation to fall sharply this year as the impact of last year’s sharp rise in energy prices disappeared from year-on-year price comparisons, and said he was “very relieved” that inflation was stable.

“Right now I do see encouraging signs. There is evidence of encouraging progress. But we have to be very vigilant in this regard,” he said. further up. “

Financial markets on Friday expect the Bank of England to raise interest rates again this year, with rates peaking at 4.5%.

Bailey said last year that he was trying to secure wage growth He was criticized by unions after matching inflation would delay inflation back to its 2% target and shift the cost of higher inflation to those with less bargaining power.

On Thursday, Bank of England staff raised their short-term forecasts for the economy, predicting moderate growth in the three months to the end of June, rather than contraction.

Bailey said the UK economy had now avoided a Good chance for a recession.

“The growth outlook is better now, much better. I think it’s reasonable to say that we have a good chance of avoiding a recession this year,” he said. It did say that the forecast declines were small each quarter and a modest upward revision would be enough to break the quarter-over-quarter decline.



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