BoE Gov Bailey: the usual transmission mechanism not yet being demonstrated on wages

<p>Bank of England Governor Andrew Bailey spoke as part of a panel discussion on the sidelines of International Monetary Fund meetings in Morocco. over the weekend. </p><ul><li>said he was puzzled by the continued strength of pay growth in the UK</li><li>said its not yet responded to the BoE's interest rate hikes</li><li>increases in borrowing costs were having an impact on employment numbers and in the housing market</li></ul><p>More:</p><ul><li>potential growth in the UK has fallen from 2.25-2.5% in the past to "at best, 1.5%" and “that complicates monetary policy” </li><li>signalled rates are likely remain at around the current 5.25 per cent as policy “has to be restrictive” to get inflation back to 2 per cent</li><li>“The last mile will be the hardest”</li></ul><p>Bailey added that the Bank of England's fourteen successive increases in borrowing costs are “having an effect” and “there has been some good news on inflation lately”.</p>

This article was written by Eamonn Sheridan at www.forexlive.com.