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MNI BRIEF: Labour Force Participation Rates Key - BOE's Bailey

(MNI) London
(MNI) London

-BOE Bailey puts spotlight on shrinking labour force and warns any forward guidance not sustainable.

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The shrinking UK labour force, which could create second round inflation effects, was a key focus for policymakers, according to Bank of England Governor Andrew Bailey. Unemployment had not picked up after the closure and re-opening of the UK economy but "the story is much more about participation than unemployment," with the size of the labour force declining, and uncertainty over whether older workers will ever return to the labour market, he said.

Bailey, speaking at the SUERF Colloquium, said that the Bank's job was to get inflation back to target when internal and external shocks "risk leading to persistence in domestic wage and price setting, so-called second round effects."

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The shrinking UK labour force, which could create second round inflation effects, was a key focus for policymakers, according to Bank of England Governor Andrew Bailey. Unemployment had not picked up after the closure and re-opening of the UK economy but "the story is much more about participation than unemployment," with the size of the labour force declining, and uncertainty over whether older workers will ever return to the labour market, he said.

Bailey, speaking at the SUERF Colloquium, said that the Bank's job was to get inflation back to target when internal and external shocks "risk leading to persistence in domestic wage and price setting, so-called second round effects."

Keep reading...Show less