London Daily

Focus on the big picture.
Sunday, Jun 22, 2025

BoE's Bailey urges firms to assume lower inflation when setting prices

BoE's Bailey urges firms to assume lower inflation when setting prices

British businesses should consider official forecasts showing inflation will fall this year when setting their prices, Bank of England Governor Andrew Bailey said on Friday.
"When companies set prices, I understand that they have to reflect the costs that they face," Bailey told the BBC.

"But what I would say, please, is that when we are setting prices in the economy and people are looking forwards, we do expect inflation to come down sharply this year. And I would just say, please bear that in mind," he said.

Bailey went on to say he did not have any evidence that companies were putting prices up more than necessary.

Britain's central bank raised its main interest rate to 4.25% on Thursday from 4%, a day after official figures showed an unexpected rise in the annual rate of consumer price inflation to 10.4% in February.

Bailey repeated that the central bank expected inflation to fall sharply this year as the impact of last year's steep rise in energy prices fell out of year-on-year price comparisons, and said he was "very relieved" that inflation had stabilised.

"Now I do see encouraging signs. There is evidence of encouraging progress. But we have to be extremely vigilant on that front," he said.

"And I would say to people who are setting prices, please understand that if we get inflation embedded, interest rates will have to go up further."

Financial markets on Friday priced in one more BoE interest rate rise this year, taking rates to a peak of 4.5%.

Last year Bailey faced criticism from trade unions after he said that attempts to ensure pay growth matched inflation would delay the return of inflation to its 2% target, and shift the costs of higher inflation to those with weaker bargaining power.

On Thursday, BoE staff revised up their short-term forecast for the economy to predict modest growth in the three months to the end of June, rather than a contraction.

Bailey said Britain's economy now had a good chance of avoiding recession.

"The prospects for the economy in terms of growth are now better, considerably better. And I think it is reasonable to say that there's a pretty strong likelihood that we will avoid a recession this year," he said.

In November the BoE forecast the longest recession since modern records began, though it did say the predicted fall in each quarter was small and a modest upward revision would be enough to break the string of quarter-on-quarter declines.
Newsletter

Related Articles

0:00
0:00
Close
We have new information and breaking details to share about what is shaping up to be a historic air campaign tonight
Six Massive Bombs Dropped on Fordow; Trump: 'A Historic Moment for the U.S., Israel, and the World'
Fordow: Deeply Buried Iranian Enrichment Site in U.S.–Israel Crosshairs
United States Conducts Precision Strikes on Iran’s Nuclear Sites
US strikes Iran nuclear sites, Trump says
Pakistan to nominate Trump for Nobel Peace Prize.
BBC Demands Perplexity AI Immediately Stop Using Its Content
Telegram Founder: I Will Leave My Fortune to Over 100 of My Children
Political Turmoil Resurfaces in Belgium Amid Economic Concerns
Fed policymakers divided on timing of interest rate cuts
Trump signals imminent agreement with Harvard University
Inheritance tax referendum alarms Swiss billionaire community
Japan cancels bilateral security meeting amid US defence demands
AI skeptic Emily Bender warns that ‘the emperor has no clothes’
Israel Confirms Assassination of Quds Force Commander in Tehran
16 Billion Login Credentials Leaked in Unprecedented Cybersecurity Breach
Senate hearing on who was 'really running' Biden White House kicks off
Iranian Military Officers Reportedly Seek Contact with Reza Pahlavi, Signal Intent to Defect
FBI and Senate Investigate Allegations of Chinese Plot to Influence the 2020 Election in Biden’s Favor Using Fake U.S. Driver’s Licenses
Vietnam Emerges as Luxury Yacht Destination for Ultra‑Rich
Plans to Sell Dutch Embassy in Bangkok Face Local Opposition
China's Iranian Oil Imports Face Disruption Amid Escalating Middle East Tensions
Trump's $5 Million 'Trump Card' Visa Program Draws Nearly 70,000 Applicants
DGCA Finds No Major Safety Concerns in Air India's Boeing 787 Fleet
Airlines Reroute Flights Amid Expanding Middle East Conflict Zones
Elon Musk's xAI Seeks $9.3 Billion in Funding Amid AI Expansion
Trump Demands Iran's Unconditional Surrender Amid Escalating Conflict
Israeli Airstrike Targets Iranian State TV in Central Tehran
President Trump is leaving the G7 summit early and has ordered the National Security Council to the Situation Room
Taiwan Imposes Export Ban on Chips to Huawei and SMIC
Israel has just announced plans to strike Tehran again, and in response, Trump has urged people to evacuate
Netanyahu Signals Potential Regime Change in Iran
Juncker Criticizes EU Inaction on Trump Tariffs
EU Proposes Ban on New Russian Gas Contracts
Analysts Warn Iran May Resort to Unconventional Warfare
Iranian Regime Faces Existential Threat Amid Conflict
Energy Infrastructure Becomes War Zone in Middle East
UK Home Secretary Apologizes Over Child Grooming Failures
Trump Organization Launches 5G Mobile Network and Golden Handset
Towcester Hosts 2025 English Greyhound Derby Amid Industry Scrutiny
Gary Oldman and David Beckham Knighted in King's Birthday Honours
Over 30,000 Lightning Strikes Recorded Across UK During Overnight Storms
Princess of Wales Returns to Public Duties at Trooping the Colour
Red Arrows Use Sustainable Fuel in Historic Trooping the Colour Flypast
Former Welsh First Minister Addresses Unionist Concerns Over Irish Language
Iran Signals Openness to Nuclear Negotiations Amid Ongoing Regional Tensions
France Bars Israeli Arms Companies from Paris Defense Expo
King Charles Leads Tribute to Air India Crash Victims at Trooping the Colour
Jack Pitchford Embarks on 200-Mile Walk to Support Stem Cell Charity
Surrey Hikers Take on Challenge of Climbing 11 Peaks in a Single Day
×