Andrew Bailey has sparked optimism by suggesting that the UK’s minor recession might have already concluded, citing clear indications of economic recovery.
Speaking to Members of Parliament, the Bank of England’s Governor emphasized that before considering a reduction in interest rates, the Bank is closely monitoring developments in service sector pricing, wage increases, and job market dynamics.
Despite maintaining interest rates at a 16-year peak of 5.25 percent, there is increasing pressure on the Bank to lower borrowing costs, especially in light of decreasing inflation and recent data indicating the UK entered a recession in the latter half of 2023.
During his appearance before the Treasury Select Committee, Mr. Bailey remarked, “Following a phase of rapid disinflation and stringent monetary policy, all our metrics suggest that the economy is operating at full capacity.
“This is a positive development. We aim to avoid a swift rise in unemployment, a situation we have encountered previously due to similar measures.
“Therefore, despite widespread speculation about a minor recession, we believe the economy is already exhibiting clear signs of improvement.”
