Bank of England Governor Andrew Bailey has denied suggestions that the central bank’s economic outlook is too optimistic in the wake of its latest monetary policy report.
Bailey told CNBC’s Geoff Cutmore on Thursday that he would “really lean back on people who think the Bank of England is optimistic,” since although the data so far has shown recovery in certain parts of the economy, the MPC is “not taking any strong message from that going forwards.”
The “X factor,” Bailey said, will be the evolution of the Covid-19 outbreak, with the Bank’s forecasts including the “largest ever degree of uncertainty in any forecast the MPC has done.” His comments come as modest containment measures are being introduced in parts of the U.K. amid fears of a second wave.
“Closely related to that is people’s natural caution in response to their perceptions and understanding of the evolution of Covid, and how people are cautious about re-engaging in economic activity,” Bailey said, adding that the BOE has seen evidence of this so far.
“The third thing … is to what extent there will be structural change in the economy, because there will be parts of the economy which are not viable, if you like, going forward,” Bailey added.