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Bailey Q&A Begins - Questioned on Credibility

BOE

Q: What would you say to those who say the BOE is failing and does that matter for credibility?

  • A: Shocks to the economy have been much larger, the largest one being the impact of the war on Ukraine. Test of the regime is how we return inflation back to target.
  • Need to look at this in stages: 1)What are the shocks? 2) How to deal with them 3) Can we bring inflation back to target.Re food prices - the news is not about persistence in terms of long-run persistence - but in terms of how quickly this works through the system and how quickly this dissipates.
  • Will see a reduction in food price inflation - but it is taking longer - sometimes due to energy, hedging etc. - how much is predictable and how much is emerging? Do think how they've dealt with it is appropriate.

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