Bank of England warns ‘no easy route’ out of cost of living crisis

Andrew Bailey, the central bank’s Governor, spoke at Brunswick Group’s Cost of Living Conference earlier today about the rise in the cost of living. Specifically, Mr Bailey addressed concerns about the Bank of England’s 10 consecutive Base Rate increases to mitigate the impact of inflation on the economy.

He said: “First, with the external shocks that have hit the economy, there is no easy way out. People on lower incomes are struggling to make ends meet. We must ensure that the situation does not get worse through homemade inflation taking hold.

“The UK labour market remains very tight. Since the start of the Covid pandemic, we have seen a large increase in the number of people who do not take part in the labour market in this country. The UK labour force has shrunk.

“While not the focus of my remarks today, this feature of the UK labour market is an important backdrop to our monetary policy decisions.

“And if we do too little with interest rates now, we will only have to do more later on. The experience of the 1970s taught us that important lesson.”

More to follow…

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