Bank of England's Bailey says pace of recovery is levelling off

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LONDON (Reuters) – Bank of England Governor Andrew Bailey said Britain’s economic bounce-back from its COVID lockdowns was showing some signs of a slowdown and he was concerned about the problems facing companies trying to fill vacancies.

“At the moment, we’re seeing some levelling off of the recovery. The short-term indicators are suggesting that,” Bailey told the Treasury Committee in the lower house of parliament.

He stuck to his view that a recent jump in inflation – which the BoE says will hit 4%, or double its target – would not prove to be persistent and bottlenecks in supply chains which have helped to drive up prices were likely to be resolved.

The Bank of England last month said it expected to reduce modestly the huge support it has provided to Britain’s economy during the COVID-19 pandemic and it set out how it could gradually tighten monetary policy.

Bailey said the expiry of the government’s job-subsidies programme at the end of this month would probably help employers to fill their positions, but he did express concern about potential inflationary pressures from the lack of candidates.

“For me, others will speak for themselves, but I have a bit more concern about persistence in the labour market story,” he told the committee.

Deputy Governor Dave Ramsden said he put more weight on an inflationary scenario than a deflationary one, echoing comments he made in a speech in July that suggested he might be moving towards voting to scale back of the BoE’s stimulus.

“Consistent with my assessment of the outlook, I voted with the majority in August for no change in Bank Rate or the stock of QE,” Ramsden said in an annual report to parliament.

“But I will be monitoring the data and newsflow, in particular the progression of the Delta wave of Covid and developments in the labour market, closely.”

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