(Bloomberg opinion) – This is never a good sign when a governor of the central bank says his country’s problem is a ‘pretty sad story’. This is how the Governor of Bank of England, Andrew Bailey, the UK described last week at the Federal Reserve Symposium in Jackson Hole, Wyoming. He said that poor productivity and poor labor participation present an ‘acute challenge’ to increase potential growth. It is well trampled among economists, but from the head of the central bank it is very close to the criticism of the government. There has recently been a noticeable cold in communication that can be considered debt shift. One can see these remarks as a forerunner to announce interest rate cuts or even stop quantitative tightening. But that is now how the boo rolls; In fact, the waters of the waters pointed to the contrary – to buy even more time to maintain the highest benchmark in the group of seven to see how economic indicators take out. If inflation is really much higher or too close to prevailing gilded yields, it is the BoE’s clear duty to act. Despite widespread problems with the quality of the National Statistics data office, especially in the job market, Bailey draws some good conclusions where it suits him. Almost in the same breath, he contradicts his own analysis by asking if the problem can be overstated too much – “It is also possible that those who do not participate in the economy participate more in the completion of the workforce survey.” Consult me another darkening paradox. Apparently, he sees fiscal policy that bears the responsibility of sorting out something of this and not his financial tool box. Independence in central banking is a noble concept, but it must be seen to do a good job. Bailey regularly mentions his fear that the British economy has a ‘velocity restriction’, although he does not specify such an ominous concept. Nevertheless, the impression is that the 1.3% growth rate expected by Bloomberg Economics for this year is on that border. Rather than relieving an interest rate to relieve root to increase growth as rates and prospective taxes exacerbate the economic horizon, he prefers to wear a metaphorical stick warning of potential inflationary triggers. Meanwhile, the Resolution Foundation expects British unemployment to reach 5% in the August release, a sharp jump of 4.7% of June. Charly is that Bailey’s rhetoric may just be a governor’s trick to keep all options open for the next quarterly monetary policy review on November 6. The gravity center moved on the monetary policy committee, with four of the nine members voting at the last meeting on August 7, when the official cut only 25 basis points to 4%. It required an unprecedented second voice to ensure this fifth consecutive quarterly cut. The two MPC members are very involved in the preparation of the quarterly analysis, the Deputy Governor for Monetary Policy, Clare Lombardelli, and main economist Huw Pill, were both on the Hawkish side. For Lombardelli, who is responsible for executing the proposed reforms from the former chairman of Ben Bernanke, it was the first time since she took the role last July not to vote with the governor. Bailey seems to be the risk of losing his internal team if it is too aggressive pressure for more cuts when the heading inflation is expected to rise to 4% by September – which will be the latest data during the November Review. The role of our monetary rulers is to look through short-term trough or peaks to try to reason whether the 2% inflation target will be reached in the medium term. All the BoE’s recent three -year predictions expect exactly that. The CPI is expected to be 3.5% on average this year and drops to about 2.5% next year, still nominally above the target, but certainly in control. The preferred core services -inflation meter, which excludes more volatile items and indices, dropped a notch to 4.1%in July, all in line with its predictions. There is no sudden panic about inflation. But to clear everything from the recent Boe Speak to Divine things, is out of me. Life can get a little easier for the BoE if the Fed deliver a rate cut at the September 17 meeting. Although Bailey would never admit it, it is beyond his comfort zone to get before the US before the US. Maybe if others do the heavy lifting for him, he can’t fall off his own economy. More from Bloomberg opinion: This column reflects the author’s personal views and does not necessarily reflect the opinion of the editorial or Bloomberg MP and his owners. Marcus Ashworth is a columnist in Bloomberg covering European markets. Previously, he was main markets strategist for Haitong Securities in London. More stories like these are available on Bloomberg.com/opinion © 2025 Bloomberg LP
Trash is the wrong language for central bankers
