Bank of England Governor Andrew Bailey said in a testimony before the House of Commons Treasury Committee said he is not at all happy about the inflation outlook and that it is a bad situation to be in, reported Reuters. However, Bailey added, over 80% of the UK's inflation overshoot is due to energy and tradeable goods.
It is accepted practice to accommodate supply shocks when they are transient and focus on second-round effects, Bailey added, adding that he does not reasonably think that they could have done anything differently on monetary policy. Bailey highlighted the weakness in the latest Chinese activity data when discussing shocks to the global economy.
It is not out of place to describe the impact on demand patterns in the UK as "transient", unlike in the US. Bailey noted that the scale and persistence of the fall in the UK labour force is very unusual.
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