When is andrew bailey coming back

An illustration helps here. That's the base effects at work. Second, and beyond that, additional price pressures can arise from the various shortages caused by imbalances in the recovery of supply and demand, as the latter recovers more rapidly than the former.

But these imbalances should not last. Let me take an example from the US to illustrate. Third, we expect to see a switch from demand for goods towards services as restrictions are lifted, which should rebalance the composition of demand.

Over time, this should lead to an easing of inflation as spending is redirected towards sectors with more spare capacity. But, initially, that rebalancing may be uneven. Here in the UK, over recent weeks we saw an initial very strong pick-up in retail sales and restaurant table bookings, the growth of which has already eased off.

Where supply returns more slowly than the initial surge in demand, we may see a temporary rise in prices. Let me turn now to the labour market, which is of course also highly important for this story. Here, too, the story has been far from normal. During the Covid period, employment has fallen much more than the rise in unemployment, albeit by significantly less than would ordinarily be implied by the decline in activity. Two things help to explain this. First, the furlough scheme has worked well to preserve jobs in firms or sectors temporarily hit by the effects of the pandemic and associated restrictions.

Second, there has been a rise in inactivity, in other words those who do not have a job and are not currently searching for one. Turning to earnings, measures have been affected by compositional effects related to the changes in the labour market caused by the pandemic. On the one hand, lower pay for those who have been furloughed has dragged on average wages.

On the other hand, the fact that job losses have been skewed towards lower-paid and part-time roles has boosted the measure of average wages for those still in employment. Initially the first of those effects dominated, and the level of private sector average weekly earnings fell during the middle of last year, such that for a while the growth rate was, unusually, negative.

As the Covid period has gone on, however, the second effect has come to dominate. To illustrate the magnitude, a second little piece of arithmetic. Just suppose for a moment that, for the rest of this year, the level of average earnings is flat — what would be the peak rate of growth of the series? That is not where we should place most of our focus on the labour market.

Our focus should be on whether, and how rapidly, people return to the labour force, and in what degree, a point I will come to in a moment. Let me now turn to what could cause things to turn out differently, and thus what we must watch very carefully.

First, so far, we have seen a pick-up in import prices which has extended beyond energy prices, and we have observed these increases pass through into producer output prices, and now into consumer prices, to some extent. In some cases these increases reflect prices returning to pre-Covid levels, and in part they also reflect bottlenecks in supply chains as we experience a rapid but uneven recovery.

There are good reasons to interpret this as a temporary feature, but we must be on the lookout for the risk that these features are more sustained. Second, we could see demand pressures on either side of the most likely outcome. Demand could be weaker if Covid continues to be a material health concern and prompts more caution in activity and spending habits. But there is also an upside risk that the substantial build-up of excess savings in the last year or so raises consumer spending to a larger degree than currently projected.

Third, we could also see wage pressures arising if the number of people in work or seeking work does not return to pre-Covid levels, and inactivity remains at a higher level. A return of labour supply is therefore important. Fourth, a further challenge would arise if these temporary price pressures have a more persistent impact on medium-term inflation expectations, which shift to a higher level inconsistent with the target. As set out in the Minutes of the MPC's June meeting, taking together the evidence from financial market measures and surveys of households, businesses and professional forecasters, the Committee judges that UK inflation expectations currently remain well anchored.

It will be important to continue to monitor closely movements in measures of medium-term inflation expectations, however, and to adjust policy accordingly. You may disable these by changing your browser settings, but this may affect how the website functions. We use analytics cookies so we can keep track of the number of visitors to various parts of the site and understand how our website is used.

For more information on how these cookies work please see our Cookie policy. He began his term on 16 March In July , Andrew became Managing Director of the Prudential Business Unit, with responsibility for the prudential supervision of banks, investment banks and insurance companies. Andrew was appointed as a voting member of the interim Financial Policy Committee at its June meeting. View more Latest news and publications.

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