00:00Governor, why have you held interest rates where they are when we've had some more positive news around inflation, oil
00:06prices are coming down, it's still like a rosier picture, but you're still pretty cautious here?
00:11Well, we have had encouraging news. I mean, I'm very encouraged. We've obviously got now this understanding about what's going
00:21to happen in the Middle East.
00:23But, and energy prices have come down quite a lot, but they're still above where they were before this conflict
00:29started.
00:31Inflation is higher than we expected it to be. I really expected, and I really believe we would have been
00:36back at the 2.2% target by now, but it is good news.
00:40But, of course, now what we've got to do is get it back to 2%. I think holding is the
00:45right position to be in at the moment for that, so I think it's a sensible decision in the light
00:51of the news.
00:51I'm encouraged, but we've now got to get inflation back down to 2%.
00:55You mentioned in the minutes of the meeting, Andy, your statement, caution around the path of energy prices.
01:01Yes.
01:01They're down. Does that reflect uncertainty or perhaps how solid this piece will be? It's been an extremely volatile situation.
01:13Do you, frankly, mistrust that this is the end of the story for energy?
01:17A mistrust, I think, would be an overstatement. I mean, I'm very, very, very pleased to see that this agreement
01:22is being reached. I think it's good news.
01:24But there is uncertainty around a number of things. There's uncertainty, obviously. We need to see it, obviously, settled down.
01:30I think everybody wants it to settle down, hopes it will, so we need to see that.
01:34Then the next step is, of course, we need to see the assessment of how much damage has been done
01:38to the infrastructure for supplying energy.
01:41That's probably a bit more of an issue with gas than oil, but, again, we need to see that.
01:45I know there's a huge willingness and commitment to get supplies back online, and that's good, but we need to
01:51see that assessment.
01:52And then the third piece, which is the one that, obviously, we look at very closely, because it's where our
01:56interest rate decisions have their greatest effect, is, look, inflation has been higher than we thought it would be.
02:02Are we going to get any persistence in terms of its impact on conditions in the UK?
02:08Now, there, I would say, look, the conditions are one of us. The economy has softened.
02:14So that's the backdrop against which I'm judging it.
02:18OK. Just looking ahead, we have a by-election going on right now, a great deal of speculation and about
02:28the leadership of not just the Labour Party but the country.
02:32Would a period of political instability come with a negative impact on the public finances and particularly the cost of
02:38borrowing?
02:39Well, obviously, I never comment on politics, and today is a by-election day, so I'm particularly never going to
02:45comment on politics today.
02:48Stability is important. I think everybody recognises that, actually, so this is not a point about one part of the
02:54political spectrum versus another.
02:55I think everybody recognises the importance of stability, and it is important, and it's our job, of course, to deliver
03:00our part of that picture.
03:01OK. We've seen videos published online, fake videos, of you fighting with Nigel Farage, remarkable pictures, all fake.
03:11What is your response to that? And are you concerned there is an attempt here by somebody to try and
03:16undermine institutions, particularly central banking and your role in the economic system?
03:21Well, they are fake, no doubt about that. I'm actually more concerned. They are attempted frauds on the public.
03:29So I'm more concerned about people taking advantage of the public. I think people recognise that it's very unlikely that
03:36either of us would be fighting in any circumstances.
03:38So it's not that. It's the fact that they're being used to defraud members of the public. So I'm very
03:44concerned about this.
03:45We're finding it very hard to get to identify who's actually responsible for them, which I think is really important,
03:51and it's really important we can do this.
03:53So if anybody has any information on that, we want to know it, because any attempted fraud on the public
03:58is bad. We don't want to see this happening.
04:02Finally, next week sees the 10th anniversary of the vote to leave the European Union. What's your assessment, the bank's
04:07assessment? Has Brexit been good or bad for the British economy?
04:12Well, let me take that in parts. I, first of all, have spent 10 years saying very clearly I'm a
04:18public official, and I don't comment on Brexit per se.
04:23That's a decision that the British people took in a referendum. Our job then was to get on and implement
04:27it, and that's what we've done.
04:30People obviously don't ask me the follow-up question, which is a perfectly reasonable follow-up question, and I can
04:34answer it in two parts, which is, yes, but what's been, as you said, what's been the impact of Brexit?
04:39Now let me take two parts of that, which are very much obviously in the Bank of England's area of
04:44responsibility and expertise.
04:46One is the economy as a whole. I think the level of activity and growth in the economy has been
04:53lower, and the reason for that is that if you reduce Britain's, the markets, the size of the markets that
05:00we trade with, so if we reduce our export markets, then that does tend to have a negative impact on
05:07growth.
05:07It does tend to have a negative impact on productivity and the size of the market. We learned this from
05:11Adam Smith, by the way. I'm not making this up.
05:16And that was at the heart of the points that the Bank has been making for the last ten years,
05:20to say, we thought this would happen, and broadly it has developed as we thought.
05:24Now, in the long run, trade and markets adapt, but the long run is, it's hard to, you can ask
05:30people how long is the long run, it's hard to know.
05:31So that's the first point.
05:33The second point goes a little bit the other way, which is, if we get about ten years, people were
05:38saying that this would be very bad for the City of London, very bad for Britain's financial markets.
05:43Now, I'm not pretending it's been good, but I would say that I think it has been nowhere near as
05:49detrimental as many people were predicting at the time.
05:52And a lot of people, the Bank of England included, have been working very hard for the last ten years
05:57to make sure that didn't happen.
05:58And I think we have been able to, in a sense, reinforce why London is such an important financial centre,
06:06why Britain is such an important provider of financial services.
06:09So that effect hasn't been anything like, I think, what people predicted it would be.
06:13Here we go.
Comments