Treasury Committee
20 May 2026
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Treasury Committee House of Commons
00:06 - 00:35
Speaker 19
Order. Order. Welcome to the Treasury Select Committee on Wednesday, 05/20/2026. Today, we've got one of our regular sessions, with the Bank of England, particularly relating, of course, to the Monetary Policy Committee's, last, decision, was on the April 26, where the decision overall was to hold interest rates at 3.75. And so I wanted to welcome our witnesses.
We have, of course, Andrew Bailey, the
10:00 - 11:07
Speaker 11
All of that setting, it looks like there is enough in the system out there that even if we see somewhat of a scenario b unfolding, we should be able to control inflation. I'm more worried about the fact that now we are faced with a much sharper policy trade off that when inflation happens now when when and if we do need to tighten in a more severe scenario, then we are going to have to pay a much higher cost for that. And for the re for the obvious reason, the economy is in a weaker place. Monetary policy is already tighter than when, you know, you remember the 2022 shock. So in that sense, there is more sort of uncertainty about which way things would unfold.
And I think broadly speaking, I would say that, you know, even in a fairly severe scenario, we have enough tightness in the system and the economy is in a position where it's normalized compared to where it was in the pandemic that we shouldn't see the disinflation process derailed and, you know, things would normalize in due course. But I can't rule out the possibility that these are twin energy shocks happening at the back of each other, which can then have repercussions for where inflation goes, and that's why we've got to do our job more, you know, strictly than before.
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