Ahead of official data expected to show annual cost of living growth approaching 10%, Andrew Bailey told an audience in the City that the Bank’s monetary policy committee (MPC) was considering abandoning rate hike policy . in quarter steps. The governor said it was also time for the Bank to draw up plans to sell some of the bonds – totaling £875bn – it has bought at various stages since the 2007-09 global financial crisis. Bailey said the scheme could start in September and that the Bank was looking to reduce its holdings of nursing mothers by £50bn to £100bn in the first year. This process, known as quantitative tightening, is expected to amplify the impact of higher interest rates by reducing the amount of money circulating in the economy. The governor said there should be no doubt about the Bank’s determination to bring inflation back to the government’s 2% target. “Let me be quite clear: there are no ifs or buts in our commitment to the 2% inflation target. This is our job and this is what we will do,” he said in a speech at the Mansion House in London. Subscribe to the Business Today daily email or follow Guardian Business on Twitter @BusinessDesk Bailey said the Bank was addressing the risks of inflation – currently 9.1% – causing price and wage rises and that the MPC had already stressed that if pressures persisted, stronger action would be needed. “Simply put, that means a 50 basis point hike will be among the options on the table at the next meeting.” Bailey, who was one of six MPC members to vote for a quarter-point increase when rates rose to 1.25% last month, said the half-point increase “wasn’t locked in and anyone predicting that he makes his own opinion based on them”. However, markets are likely to interpret the governor’s remarks as a signal that the MPC is becoming more hawkish on inflation. The Bank is due to announce its next interest rate decision on 4 August.
