BoE’s Bailey: Expect pickup in inflation towards 2% in next few months

The Bank of England (BoE) Governor Andrew Bailey, speaking on BBC Radio 4 this Monday, said that the effect of COVID-19 restrictions on the economy is huge but appear to be reducing.

Key quotes:

• I am now more positive but with a large dose of caution about recovery.
• The economy expected to get back to pre-pandemic size around the end of this year.
• We now have a more balanced picture of risks.
• The build-up of savings is an upside risk
• I think there could be spending of savings.
• Very helpful furlough scheme projected to extend beyond the end of COVID restrictions.
• I would expect the next BoE forecasts to show a lower peak in unemployment.
• I would expect a pickup in inflation towards 2% in the next few months.
• The question is whether the pickup in inflation is sustained.
• We will need to see evidence trend in inflation is sustainable.
• We do not see inflation rising to 4-5%.
• We are not out of tools for policy.

The comments did little to influence the British pound or provide any meaningful impetus to the GBP/USD pair, which was last seen hovering in the neutral territory around the 1.3925-30 region.