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7/1/2021, 10:31 AM (Source: TeleTrader)
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BoE's Bailey: UK GDP to grow by 7.25% this year

Bank of England (BoE) Governor Andrew Bailey remarked on Thursday that the United Kingdom's gross domestic product (GDP) is expected to grow by 7.25% by the end of 2021 after decreasing by 9.75% in 2020 due to the COVID-19 pandemic as the economy right now "is only 5% smaller than it was 18 months ago."

Bailey stated the crisis has led to a "simultaneous and substantial fall in both demand and supply" but stressed the BoE expects that to be temporary as the "economic policy response has been designed to ensure that the longer-term damage [...] has been as small as can be." He warned of an output gap but noted that it is "nowhere near as large as would be implied by the fall in demand if this was a normal recession."

Bailey added that consumer price index [CPI] inflation grew to 2.1% in May, "just above the MPC's [Monetary Policy Committee] target," but that the increase in inflation should be temporary. "We expect to see a switch from demand for goods towards services as restrictions [against COVID-19] are lifted, which should rebalance the composition of demand," he said.

Baha Breaking News (BBN) / JR