Bank of England Governor Andrew Bailey said the bank needed to maintain a “gradual approach” to easing policy.
He added that monetary policy will need to remain tight for a sufficient period until the risks that threaten inflation with a sustainable return to the 2% target in the medium term dissipate.
He continued that Labor’s budget provided a “reliable” path for growth and did not complicate the bank’s central task of getting inflation back on target.
Bailey said he agreed “strongly” with Labor Finance Minister Rachel Reeves’ efforts to lift the UK’s growth rate, adding that it was crucial to improving the country’s economic outlook.
The central bank governor noted that both Reeves and her predecessor, Conservative Finance Minister Jeremy Hunt, have set out strong visions for lifting UK growth.
“We have, by recent historical standards, low potential growth,” he said. “If we raise the potential growth rate, the issue of financial sustainability becomes easier.”
“I strongly agree with the Chancellor – and even the former Chancellor – that raising the UK’s potential growth rate is a way to mitigate this situation and address these very significant structural headwinds,” he added, referring to rising global debt levels.
