current rate at their current rate. but we expect inflation to come down and it is important then that price setting and wage setting reflects that because the current levels, i will be honest, they are unsustainable. the levels, i will be honest, they are unsustainable. levels, i will be honest, they are unsustainable. the governor of the bank of unsustainable. the governor of the itank of england unsustainable. the governor of the bank of england andrew unsustainable. the governor of the bank of england andrew bailey. . bank of england andrew bailey. defending the decision of the bank to raise the cost of borrowing in the uk by half a percentage point. a lot of pressure is coming onto the bank, not only to adhere to its remit of keeping inflation, that is the price of goods and services, at just 2%, but also to stave off the potential for a future recession which some economists are now talking about quite openly as potentially happening next year. andrew bailey said it is no
a seven, 8% rise when inflation is 1196, how cannot inflation?- a seven, 8% rise when inflation is 1196, how cannot inflation? i am not auoin to 1196, how cannot inflation? i am not going to be 1196, how cannot inflation? i am not going to be involved 1196, how cannot inflation? i am not going to be involved in 1196, how cannot inflation? i am not going to be involved in individual. going to be involved in individual wage settlements. my message is one for the economy as a whole, that there is a risk that as inflation comes down, the path down is not as fast and is interrupted if we get more domestic price inflation, and that can come from price setting and wage setting. the that can come from price setting and wage setting- that can come from price setting and wage setting. the imf came out with a reort wage setting. the imf came out with a report saying wage setting. the imf came out with a report saying not wage setting. the imf came out with a report saying notjust. wa
welcome to the programme. there are tentative signs that inflation is coming under control, and the recession forecast last year will be shallower and shorter than expected. butjust to make sure, the central banks are raising the interest rates again. yesterday it was the fed, today the bank of england increased the base rate, half a point, to 4% the highest it has been in m years. we think inflation will come down rapidly, and a lot of that is down to energy prices, which have fallen rapidly. but i m afraid there are big risks out there which mean that it may not happen in that way. yet we re still seeing stronger pressure from price and wage setting in the economy in the question is, will that start to ease off? coinciding with the bank s decision came a profit announcement from shell and a rather blunt illustration
shareholders and their customers. it is not their employees. so when you look at how the stock you know, we re celebrating saying this is good news, it s good news for amazon, it s good news for the economy. think about this, 350,000 people now have more money to spend. the stock goes down. because shareholders see no reason to pay people more than the absolute minimum. so is one of the issues that we face a bit of a twisted incentive schedule for ceos today? i think you actually just described the way wage setting works in this market pretty well. it s twisted, it s complicated. it has a ton to do with bargaining power and bargaining clout. ali was very correctly going on about the supply and demand and if labor markets are really tight it should be pushing up wages. we just don t see enough of it. which is why a wage policy like this is so important. the market by itself simply isn t paying low-wage workers