We’re not cutting interest rates because we think the recession may already be over and we’re not even sure we are in recession anyway. That was the gist of Governor of the Bank of England’s evidence to the House of Commons Treasury Select Committee this morning.
Bailey fell back on the traditional excuse of CEOs who get it wrong and send their businesses into a downwards spiral: the weather
Andrew Bailey reminded the committee of what happened ten years ago when Britain seemed to be on the verge of a triple dip recession. In the end, revisions of the GDP figures revealed that we had never even entered a double dip, yet a triple one.
There are signs of economic recovery, added Bailey. Services inflation and wage rises are still too strong. Real incomes rose by 1.8 per cent last year. While the Consumer Prices Index (CPI) might well fall to 2 per cent in the spring, it is then likely to rebound – although not to anything like the level it has reached over the past two years.
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