Speaker 1: Bloomberg Audio Studios, podcasts, radio news. Bank of England Governor
Speaker 1: Andrew Bailey caution markets against reading too much into how
Speaker 1: policymakers voted this month. He spoke with Bloomberg's Guy Johnson
Speaker 1: after officials decided to cut interest rates to a nineteen
Speaker 1: month low.
Speaker 2: You've used the words gradual and careful, so I'll try
Speaker 2: to sort of provide some explanation and hope it helps.
Speaker 2: Word gradual is not new. We've been using it for
Speaker 2: some time and the reason for using that word is
Speaker 2: because we think that there is an underlying path of
Speaker 2: disinflation and that's supporting us cutting rates. That disinflation is
Speaker 2: all about the sort of the erosion of the persistence
Speaker 2: of inflation that we had coming out of the very big,
Speaker 2: obviously shocks that we had few years ago. Now we
Speaker 2: haven't changed off beyond that. We think that we are
Speaker 2: seeing this path at disinflation and that's why we've cut
Speaker 2: rates today. But we have to go on watching that
Speaker 2: carefully to see whether it will continue. So nothing changed
Speaker 2: on that front. Why have we introduced the word careful?
Speaker 2: There is an awful lot of uncertainty around in the
Speaker 2: world around us. I'm afraid at the moment, and I
Speaker 2: would just emphasize, as we've said today that that uncertainty
Speaker 2: is two sided. It's on both sides. So let me
Speaker 2: just sort of draw that out. We' seen weak activity
Speaker 2: in the UK economy. The question is to what it sent?
Speaker 2: Is that a weakening of demand? To what I sent,
Speaker 2: it is a weakening of the supply capacity of the economy.
Speaker 2: And what mixture of the two is it, because that's
Speaker 2: critical because one of them leads to lower inflation, the
Speaker 2: other leads to higher inflation. It's very hard to read
Speaker 2: at the moment, so that's one of the critical things.
Speaker 2: And then we've got more uncertainty around us. We've got
Speaker 2: we are going to get to pick up an inflation
Speaker 2: over the coming months. We don't think that will of
Speaker 2: course persistent effects, but we're going to have to watch
Speaker 2: it very carefully. And to finish, the world around us
Speaker 2: is a very uncertain place at the moment.
Speaker 3: Okay, from the starting point of gradual means once a
Speaker 3: a what you are saying, never said that? Okay, Okay,
Speaker 3: that has been the implication the market is inferred that
Speaker 3: that is what that means. You've inserted careful, does that
Speaker 3: mean you have to wait just in terms of the
Speaker 3: timing around the when rate cuts are going to come.
Speaker 3: Do you need more information so that that effectively the
Speaker 3: cuts are more backloaded because you need more information before
Speaker 3: you can make a decision.
Speaker 2: And when the way I know, the way I would inserted,
Speaker 2: is this the sort of the set of things that
Speaker 2: we are going to have to judge every time we
Speaker 2: meet has just got more complicated.
Speaker 3: Frankly, don't make it harder to make a decision to
Speaker 3: cut rates because as you say, it's symmetrically you don't
Speaker 3: know whether.
Speaker 2: It's it's going to give us a lot more to
Speaker 2: think about it every time, and we're going to be
Speaker 2: careful in the way we do it. But it's meant
Speaker 2: to say, look, there is more uncertainty. Don't take from
Speaker 2: that a particular directional message other than I still think
Speaker 2: the path is down yep, but the world is more uncertain.
Speaker 3: Are you still trying to get to one hundred basis
Speaker 3: points worth a cup this year?
Speaker 2: Well, I've never been trying to get to a number. Actually,
Speaker 2: I mean, I'm trying to get inflation sustainably to target.
Speaker 2: That's my dread. Whatever whatever path of the interest rates
Speaker 2: does it will be the one.
Speaker 3: Can you understand why the vote split looks stubbish?
Speaker 2: I can, but I would always caution you not to
Speaker 2: put much right.
Speaker 3: So it's not a communication tool.
Speaker 2: It's not a communication tool. And the reason it's not
Speaker 2: a communication we do not sit down and say what
Speaker 2: should we what do we want the vote split to be?
Speaker 2: This time? Each member votes their own position. I don't
Speaker 2: know going in what the vote's going to be. In
Speaker 2: that sense, there reason, and I always say there's no
Speaker 2: group think on the MPC. People vote their own position.
Speaker 2: You can, and I would always I would encourage the
Speaker 2: market to read the minutes pretty carefully this time, because
Speaker 2: you will see a series of positions set out in
Speaker 2: the voting. You know, there are there are those of
Speaker 2: us who voted for the cut, some of whom put
Speaker 2: emphasis on uncertainty and the word careful, some of whom
Speaker 2: wanted it to be a bit more directional and wanted
Speaker 2: the work cautious and so careful. But we're just careful
Speaker 2: in the end. And then you've got the two members
Speaker 2: who voted for a larger cut, and if you read
Speaker 2: the paragraph that comes over, they're probably in different places themselves.
Speaker 2: So don't put too much weight on the voting.
Speaker 1: That's Bank of England Governor Andrew Bailey speaking with Bloomberg
Speaker 1: Sky Johnson