Portrait of Andrew Bailey
Politician · concept
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Andrew Bailey on Inflation

Targeting 2% inflation (strong)

TL;DR

Andrew Bailey is strongly committed to restoring inflation to the Bank of England's two percent target through monetary policy actions.

Key Points

  • He is very encouraged by the progress made in reducing inflation, despite the journey being longer than initially expected.

  • He confirmed that a March interest rate cut is a genuinely open question, depending on future data and economic outlook.

  • He previously gave a lecture providing a long historical perspective on food price inflation in the United Kingdom, published on 20 November 2023.

Summary

Andrew Bailey’s core position on inflation is the resolute pursuit of the Bank of England’s 2% target as mandated for monetary policy. He has frequently expressed encouragement regarding the progress made in bringing high inflation down from its peaks, often citing data points suggesting a downward trend in price pressures. The Governor has repeatedly stressed the central bank’s commitment to taking the necessary action, which has included adjusting the Bank Rate, until there is confidence that inflation will sustainably return to the target level.

This stance has evolved in response to economic conditions, particularly regarding the timing of potential interest rate adjustments. While maintaining the ultimate goal, he has suggested that future policy moves, such as rate cuts, remain genuinely open questions dependent on incoming data, indicating a data-dependent approach. He has also provided historical context, such as reflecting on past food price inflation, to frame the current inflationary challenge for the public and markets.

Frequently Asked Questions

Andrew Bailey's position is one of firm commitment to achieving the Bank of England's 2% inflation target. He uses the Bank Rate as the primary tool to influence economic activity to bring inflation back to this mandated level. He views progress towards this goal as encouraging, but remains data-dependent on future policy.

The fundamental stance—that inflation must return to 2%—has not changed, as this is the mandate. However, his communication on the timing of interest rate adjustments has become more conditional and data-dependent. He has acknowledged that the path back to target has been longer than initially forecast.

Andrew Bailey stated he is very encouraged by the progress in bringing inflation down from its peak levels. He sees evidence that cost pressures are easing, which supports the disinflationary trend. Nevertheless, he stresses that policy will remain restrictive until there is certainty that inflation will settle durably at target.