BOE’s Bailey: Reasons for view of transitory inflation are well-founded
|Additional comments are flowing in from the Bank of England (BOE) Governor Andrew Bailey, as he continues to speak at the Mansion House on Thursday.
Additional price pressures can arise from the various shortages caused by imbalances in the recovery of supply and demand.
We expect to see a switch from demand for goods towards services as restrictions are lifted, which should rebalance the composition of demand.
Our focus should be on whether, and how rapidly, people return to the labour force rather than wage growth figures.
Current view is economy will revert to the lower average underlying growth rates that we have seen since the financial crisis.
Reasons for view of transitory inflation are well-founded.
Important to ensure that the recovery is not undermined by a premature tightening in monetary conditions.
Market reaction
GBP/USD is holding the lower ground, flirting with weekly lows just below 1.3800, as of writing.
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