BoE's Bailey says persistence of COVID are pushing inflation higher -> GBP Going UP

BoE's Bailey says persistence of COVID are pushing inflation higher -> GBP Going UP

BoE's Bailey says persistence of COVID means there has not been expected rebalancing of demand between goods and services, pushing inflation higher than expected

  • Semiconductor shortage has led to shortage of new cars and pushing up second than car prices as well in UK.
  • Higher than anticipated inflation underlines persistence of COVID.
  • Overall economic impact of COVID in UK has attenuated.
  • Seeing some short-term levelling off of recovery.
  • Do not think inflation will be persistent.
  • Think it is unlikely commodity prices will continue to rise.
  • Expect supply bottlenecks to sort themselves out.
  • Large concern is getting labour market vacancies filled.
  • End of furlough scheme should help fill vaccines.
  • He has a bit more concern regarding persistence of labour market pressures.
  • Risks on both sides to inflation returning to target over medium term.
  • Market curve does point to some increase in interest rates.

GBP Going UP 20 pips on news reaction