Bank of England Governor Andrew Bailey hedged his bets on the future direction of interest rates in a speech which offered comfort to both hawks and doves.
Signalling that future rate calls would be data led Bailey was coy as to whether rates would need to rise further.
Speaking at the Cost of Living Crisis Conference in London, he said: “At this stage, I would caution against suggesting either that we are done with increasing Bank Rate, or that we will inevitably need to do more.”
“Some further increase in Bank Rate may turn out to be appropriate, but nothing is decided. The incoming data will add to the overall picture of the economy and the outlook for inflation, and that will inform our policy decisions.”
To the hawks he offered, “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.”
But in a more dovish comment he noted, “we have to monitor carefully how the tightening we have already done is working its way through the economy to the prices faced by consumers.”
One only has to look at reports on rival news wires to see how Bailey has probably achieved his aim of giving nothing away.
Am enjoying the @Reuters Vs @Bloomberg disagreement over the intepretation of Andrew Bailey's speech.
Again - have to hand it to Reuters - pic.twitter.com/wX8ftehuoq
— Chris Giles (@ChrisGiles_) March 1, 2023
Bailey said "my reading of the evidence since our February meeting – the data we have had for economic activity, the labour market, and inflation – is that the economy is evolving much as we expected it to."
"Inflation has been slightly weaker, and activity and wages slightly stronger, though I would emphasise ‘slightly’ in both cases. A further set of data will be coming in before our next monetary policy decision later this month."
Bailey also stressed, "it is important to hear the human stories behind the data."
"These stories help us understand both what is actually going on and the impact it has on people’s lives. The MPC’s inflation target sits within the Bank’s wider mission – set out in our founding charter from 1694 – to promote the good of the people of the United Kingdom."
Bailey outlined the huge impact rising energy costs and soaring mortgage bills have had on household finances. "These concerns bring home that, by increasing Bank Rate by close to 4 percentage points, we have tightened monetary policy significantly. It is having an impact" he said.
But he said "there was no easy way out."
He highlighted the strength of the UK labour market remains very tight. "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," he added.