LONDON (Reuters) -Bank of England Governor Andrew Bailey criticised on Thursday the way BoE Chief Economist Huw Pill expressed himself about the impact of high inflation on people with lower incomes and said the central bank understood the stress high prices were causing.
“We are very sensitive to the position of people, all people, but particularly people on lower incomes,” Bailey told a press conference after the BoE raised borrowing costs for the 12th time in a row to tackle inflation which remains above 10%.
“I don’t think Huw’s choice of words was the right one in that sense. I have to be honest and I think he would agree with me,” Bailey said in response to a question from a reporter.
Pill told a podcast in April that businesses and individuals needed to accept that their earnings had fallen, sparking anger from many families struggling to buy food and pay bills.
Pill said: “Somehow in the UK, someone needs to accept that they’re worse off and stop trying to maintain their real spending power by bidding up prices, whether higher wages or passing energy costs through on to customers.”
His comments were front-page news with the Daily Mail newspaper running a headline “YOU NEED TO ACCEPT YOU ARE POORER!” as it cited Pill’s 190,000 pound ($239,799) salary.
Bailey said the BoE was “acutely aware” that people with the lowest incomes were hit hardest by the sharp rises in the price of energy and food.
But without recent increases in interest rates, the outlook for inflation and households would be worse still, he said.
Pill is due to give a presentation on the BoE’s latest forecasts on Friday.
Bailey himself faced criticism last year for calling for restraint in wage deals to avoid the risk of a price-pay spiral.
($1 = 0.7923 pounds)
(Writing by Sarah Young and Andy BruceEditing by William Schomberg)
