UK economy can be seen as a glass half full or half empty, GBP / USD collapses


“The UK economy can be seen as a glass half full or half empty,” Bank of England (BOE) Governor Andrew Bailey said during a webinar hosted by the British Chamber of Commerce on Tuesday. .

On monetary policy, Bailey said, “We have looked very carefully at the possibility of further cutting rates, including negative interest rates.”

Key quotes (via Reuters)

The recovery in the UK has been fairly rapid and quite substantial.

Resumption of Q3 a little ahead of what BOE expected in August.

Below the surface, the recovery is very uneven.

Demand for labor is low

Unemployment is higher than its declared number.

The housing market is strong, linked to the reduction in stamp duties.

Difficult projects await us.

Sees production to decrease by 7 to 10% compared to before the pandemic.

We are seeing a very unfortunate, faster return of COVID-19.

The return of COVID-19 reinforces downside risks in the BOE’s forecasts.

We will do all we can to support the UK economy.

We do not intend to take action to tighten policy until there is very clear evidence of significant progress towards achieving the 2% inflation target on a sustainable basis.

We will need a lot of evidence before we start to change the policy.

A propos de BOE Governor Bailey

Andrew Bailey is the bank of englandGovernor. He took office on March 16, 2020, at the end of Mark Carney’s term. Bailey was Managing Director of the Financial Conduct Authority before being appointed. This British central banker was also Deputy Governor of the Bank of England from April 2013 to July 2016 and Cashier of the Bank of England from January 2004 to April 2011.

Market reaction

GBP / USD extended its selloff and hit new two-month lows at 1.2717 as Governor Bailey leaves the doors open to negative interest rates as a policy option.


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