I’m not going anywhere! Bank of England boss tells MoS he’ll stay for another four years – and gives clear picture of the economy

Andrew Bailey has pledged to lead the Bank of England for another four years despite a series of calls from critics for him to step down.

The governor was accused of being too slow to raise rates to curb runaway inflation — and then going in the opposite direction by keeping rates too high for too long.

In an exclusive interview with The Mail on Sunday, he defended his record, insisting he would serve his full eight-year term, which ends in 2028, and saying there was “much work to be done”.

Bailey also painted a much more positive picture of the economy than Rachel Reeves. The Chancellor of the Exchequer has repeatedly claimed that the economy is in its worst state since World War II.

Bailey, who earns £495,000 a year, has been attacked on several fronts, including for focusing on a “woke agenda” rather than the economy and for failing to recognise the risks in the pension system in the run-up to the bond market crisis that brought down Liz Truss.

The bank’s economic forecasts have been criticised in a report by Ben Bernanke, former governor of the US Federal Reserve.

Bailey’s role as head of the Financial Conduct Authority regulator in the 2019 London Capital & Finance scandal, which saw 11,600 savers lose £237m, has also come under scrutiny.

But when asked if he intended to serve a full term, Bailey said: ‘Yes, absolutely. It has been a great privilege to serve as governor and to have led the Bank of England through the pandemic, the – unfortunately – ongoing war in Ukraine, and the impact of that on inflation.

“But there is still much to be done. I absolutely intend to serve my full term. I am very much looking forward to the next four years.”

Bailey was criticised by unions and Downing Street was angry because he said workers should help curb inflation by not demanding big pay rises.

He was speaking to The Mail on Sunday after delivering the Bank’s first rate cut since becoming governor at the start of the pandemic in March 2020. He used his casting vote to cut the base rate from a 16-year high of 5.25 per cent to 5 per cent. The Bank’s nine-member Monetary Policy Committee was split in two.

Inflation is back at the Bank’s target of 2 percent, after peaking at 11 percent almost two years ago.

Asked whether he agreed with Reeves’ gloomy economic claims, Bailey said he would “not get involved in politics” but added: “I do think it is good news and a reason to be optimistic that inflation is back on track.

“We talk to people and businesses across the country every day. For some time now, the cost of living for households and the cost of production for businesses have been the biggest concerns.

“Inflation has come down significantly over the last 18 months. So I hope that those concerns will start to abate. It’s our job to make sure that happens.”

Keeping inflation low and stable was the best thing the Bank could do to support growth and prosperity, he said. The Bank forecast a modest rise in inflation later this year and he was cautious about cutting interest rates “too quickly or too much.” The Bank has also improved its outlook for economic growth.

Last year he refused a 2.5 percent pay rise and his salary has remained unchanged since his appointment, meaning his salary has been reduced by a quarter in real terms, adjusted for inflation.

He praised the recent strength of the pound, the best-performing major currency this year, saying it had taken the edge off inflation. He added: “It will make imported goods and services a little cheaper.”

Bailey said he had met Reeves twice since she became Britain’s first female Chancellor of the Exchequer and expected a “cooperative and productive” relationship. The Bank was extensively briefed last week on her doomsday prediction that there was a £22bn-a-year hole in the public finances, which she said was far worse than feared.

Her critics say half of that alleged shortfall comes from her plans to give nurses, teachers and other public sector workers a pay rise of up to 6 percent.

Reeves’ figures are not included in the bank’s latest forecasts, which will be updated after its budget on Oct. 30.

He has defeated the opponents – for now

By Alex Brummer, City Editor

We see a transformed central banker. At the height of the Truss tantrum in October 2022 and with inflation in double digits, the usually stolid governor looked a defeated man – under fire from lawmakers, economists and some of his former colleagues.

It seemed unlikely that he would serve out his full term, which ends in March 2028, when he will be just shy of 70. But how things have changed. The Bank has cut inflation from its target of 11 per cent to 2 per cent. And last week Bailey felt confident enough to be the deciding vote in the first cut in borrowing costs for four long and miserable years.

In reality, he would have been hard to oust. The moral authority of central banks comes from their independence. Removing a leader midway could cause chaos in the government bond market.

Unlike the Chancellor, Bailey is optimistic about the UK. He argues, correctly, that as someone who visits businesses across the country every day, there is reason to be ‘optimistic’.

As one of his critics, I can’t help but be pleased that the Bank has managed to bring down inflation and get the UK through the pandemic. But Bailey and his team need to get behind a growth agenda that includes a sustained series of rate cuts.