The Bank of England will not be diverted from its fight against inflation by risks to financial stability from higher interest rates, Governor Andrew Bailey said at an event in Washington.
(Bloomberg) — The Bank of England will not be diverted from its fight against inflation by risks to financial stability from higher interest rates, Governor Andrew Bailey said at an event in Washington.
“What we shouldn’t be doing is saying, we’ve got such a problem with financial stability that we have to aim off a decision on monetary policy because of conditions and financial stability,” Bailey said at the International Monetary Fund’s spring meeting.
Silicon Valley Bank collapsed after the speed of rate rises caused losses that spooked depositors into withdrawing their cash in one of the fastest bank runs in history. Contagion swept across the regional US banks and contributed to the collapse of Credit Suisse, which was rescued by UBS AG.
Bailey stressed that monetary policy makers always take financial conditions into account but do not make decisions based on financial stability concerns. Central banks have a separate set of tools to handle bank crises, he said.
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