Bank of England governor Andrew Bailey and chancellor Jeremy Hunt vow to bring inflation down

The Governor of the Bank of England has said his "pre-occupation at the moment is inflation" and that it must be brought down to the 2% target.

Alongside the Chancellor of the Exchequer, Andrew Bailey spoke to an audience at the Financial and Professional Services dinner on Monday 10 July, outlining plans for the "future of money" and a number of reforms, but inflation was at the top of the agenda for both.

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"Looking back at all that has happened in recent years, the UK economy has been hit by a series of external inflationary shocks: higher goods prices in global markets owing to supply bottlenecks created by the pandemic; and higher energy and food prices following from Russia's war on Ukraine and its people," said Bailey.

"Looking ahead, UK headline inflation is set to fall markedly over the remainder of the year.  This largely owes to lower energy prices as last year's substantial increases drop out of the annual calculation. Food prices should fall too as lower commodity prices feed through to prices in the shops."

He said returning inflation to target is important, not least because people should trust that their hard-earned money maintains its value. 

"The future of money is the subject for the rest of my time," Bailey said.

Hunt reiterated plans to "do what is necessary for as long as necessary to tackle inflation persistence and bring it back to the 2% target".

Mansion House reforms

Meanwhile, the chancellor also revealed the government's Mansion House reforms, which included strengthening the UK's position as a listings destination, reforming and simplifying regulation, and improving outcomes for pension fund holders.

He highlighted the recent decline in the number of domestic listed companies in the UK, part of a wider trend across western markets.

A new draft legislation for Lord Hill's UK Listing Review is being published to create a "more effective regime than its EU predecessor", giving companies more flexibility to raise larger sums from investors more quickly, he said.

"I want the world's fastest growing companies to grow and list right here, making LSE more than Europe's NASDAQ. As David Schwimmer and Julia Hoggett say, we want it to be the global capital for capital," he added.

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On regulation, the chancellor praised the UK's current regimes and noted  the passing of the landmark Financial Services and Markets Act, which will ensure regulators have an appropriate focus on growth and competitiveness alongside their wider responsibilities.

He said: "The act also unlocks wholesale reform of our approach to regulation and today I can announce that we are commencing repeal of almost 100 pieces of unnecessary retained EU law, further simplifying our rulebook while retaining our high regulatory standards.

"Alongside this, last month I was delighted to sign the new UK-EU financial services MOU as we build a new relationship with our European partners."

The chancellor added an independent review was being launched into the future of payments to help deliver the next generation of world class retail payments, including looking at mobile payments.

 

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