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BOE: Bailey says if inflation good new continues, can be "a bit more activist"

BOE
Bank of EnglandCentral Bank NewsCEEMEABulletUKGlobalFixed Income BulletsForeign Exchange BulletsRegionMarkets
  • In separate parts of the interview, Bailey is quoted that if the news on inflation continues to be good the MPC can be “bit more aggressive” and "a bit more activist".
  • This is a definite step up in the language from the "gradual" line that has been used up until now. These comments make Pill's speech tomorrow morning even more pivotal.
  • GBPUSD is down from 1.3245 to below 1.3190 at writing and we would expect a notable move higher for SONIA and gilt futures on the open today (which could trigger another wave of GBP FX weakness).
  • On the fiscal side, he says that " “I think the economy has come through the shocks of the last five years better than many of us feared. So there’s a base there to develop." The line on the economy faring better isn't new - that is something that he has said previously in both speeches and has been said in the MPR.
  • “The government is right to focus on how to encourage capital investment. There is a clear need for it in terms of infrastructure. We’ve got at least three very big structural issues out there. One is the ageing population, which obviously we’re not alone in that one. Two is the demands for increase in defence spending. And the third one is dealing with climate change.”
  • On the situation in the Middle East: "We watch it extremely closely to see the impact of the latest news. But … my sense from all the conversations I have with counterparts in the region, is that there is, for the moment, a strong commitment to keep the market stable.... There’s also recognition there’s a point beyond which that control could break down if things got really bad. You have to continuously watch this thing, because it could go wrong.”

Full interview here.

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  • In separate parts of the interview, Bailey is quoted that if the news on inflation continues to be good the MPC can be “bit more aggressive” and "a bit more activist".
  • This is a definite step up in the language from the "gradual" line that has been used up until now. These comments make Pill's speech tomorrow morning even more pivotal.
  • GBPUSD is down from 1.3245 to below 1.3190 at writing and we would expect a notable move higher for SONIA and gilt futures on the open today (which could trigger another wave of GBP FX weakness).
  • On the fiscal side, he says that " “I think the economy has come through the shocks of the last five years better than many of us feared. So there’s a base there to develop." The line on the economy faring better isn't new - that is something that he has said previously in both speeches and has been said in the MPR.
  • “The government is right to focus on how to encourage capital investment. There is a clear need for it in terms of infrastructure. We’ve got at least three very big structural issues out there. One is the ageing population, which obviously we’re not alone in that one. Two is the demands for increase in defence spending. And the third one is dealing with climate change.”
  • On the situation in the Middle East: "We watch it extremely closely to see the impact of the latest news. But … my sense from all the conversations I have with counterparts in the region, is that there is, for the moment, a strong commitment to keep the market stable.... There’s also recognition there’s a point beyond which that control could break down if things got really bad. You have to continuously watch this thing, because it could go wrong.”

Full interview here.