LONDON: The Governor of the Bank of England has said the unpredictability of world events, including tariffs and conflict in the Middle East, makes it hard to determine the outlook for the UK economy.
Andrew Bailey said he viewed domestic issues as more important than global ones when it comes to setting interest rates, reported PA Media/dpa news.
Speaking to MPs on the Lords Economic Affairs Committee, he said: “Focusing on the tariff issue... it is very unpredictable where this is all going to end up.
“We are coming towards the end of the 90-day period that President Trump set out for reaching agreements. We’ve had one agreement so far which is with the UK – it obviously isn’t implemented yet – and that is it at the moment.
“So quite where this is going to go, we don’t know at this stage.”
Bailey told the committee that he was not putting that much “weight” on global developments because of how volatile things are.
“When I’m thinking about my decision on interest rates, because of the sheer unpredictability it’s not that I’m ignoring the world – anything but,” he said.
“But I’m not putting that high a weight on it because, frankly, it is so unpredictable at the moment that, as we saw in the last 24 hours, it can easily change overnight.”
US president Donald Trump stated that a ceasefire between Iran and Israel was in effect on Tuesday after a deal initially faltered and Trump said both sides had “violated” it.
Oil prices fell back sharply on Tuesday – with the cost of Brent crude oil falling by about 5 per cent in afternoon trading as trader concerns over disruption to the supply of the commodity eased.
Bailey told MPs that “for me, domestic considerations are much more important” than global considerations when it comes to setting monetary policy.
He pointed to the UK jobs market and the rate of wage growth as areas that policymakers were focused on.
The labour market was “softening” and pay rise agreements were “coming down”, the bank chief said, indicating the pressures on overall inflation in the economy were starting to ease.
