MNI BRIEF: Walking Fine Line Between Inflation Growth - Bailey

Bank of England policymakers are walking a very tight line between tackling inflation and recession caused by the hit to real income, Governor Andrew Bailey said Thursday.

"We are walking this very, very fine line between these two things," Bailey said at a Peterson Institute event. The BOE head said that "the real income shock is going to cause a slowdown in growth" and a key question was whether the tight labour market was going to ease.

Bailey said that the UK labour force was smaller than it would otherwise have been due to a mix of older people entering economic inactivity and a fall in migrant labour, and it was an open question if business would hoard labour given problems recruiting. With uncertainty high Bailey stressed that policy setting had become a high wire act, with the Bank now working on its May forecast round, with a 25 basis point hike widely expected.