Bloomberg Talks

Episode: BOE Governor Andrew Bailey Talks Farage Pressure, Holding Rates
Date: November 7, 2025
Guest: Andrew Bailey (Governor, Bank of England)
Host: Bloomberg

Episode Overview

In this timely episode, Bloomberg sits down with Bank of England Governor Andrew Bailey for a candid conversation on the BoE's latest policy decision, the economic outlook, and the pressures facing the UK’s financial system. The discussion delves into the central bank's balancing act between inflation risks and economic softness, the uncertainties of interest rate policy, the impact of AI and private credit on economic growth, and responds to recent political commentary from Nigel Farage.

Key Discussion Points & Insights

1. The Rate Decision: Balancing Inflation and Economic Softening

• Andrew Bailey explains the current policy dilemma between the risk of persistent inflation and growing evidence of economic weakening.
• He notes a shift: "In August, I was concerned more on the upside risk, but the news since then has left me in a more balanced position." (00:38)
• Emphasizes the need for more data before making further decisions, stating that only one inflation number so far has been unexpectedly positive. (00:55)

Notable Quote:

"We do need to see more evidence because so far we've had one inflation number that's come in under what we thought, which is obviously good. We need to see some more."
— Andrew Bailey (00:55)

2. Looking Ahead to December: What Might Sway the BoE?

• By the December meeting, Bailey explains, the bank will have two new sets of key data: inflation and labor market numbers. These will be critical to their decision-making. (01:24)
• The Governor acknowledges the challenge of knowing when rates have hit the "terminal rate" due to large uncertainty bands. (01:48)

Notable Quote:

"The uncertainty around exactly where [the terminal rate] is, is very substantial... I tend to look more at... the monetary conditions that we're experiencing."
— Andrew Bailey (01:48)

3. Policy Trajectory: Pauses and the Path Toward Neutrality

• As the BoE nears its neutral rate, the decisions get harder, and pauses between cuts may be longer. (02:41)
• Bailey warns that reaching "neutral" depends on evolving economic shocks but expresses hope for stability. (03:16-03:32)

“The nearer you get to wherever this sort of neutral rate is, ... you've got to land the thing out in that sense.”
— Andrew Bailey (02:51)

4. Fiscal Policy: Working with the Chancellor

• Bailey refuses to publicly pressure the Chancellor ahead of the budget, describing their relationship as "very good" and emphasizing the importance of behind-closed-doors collaboration. (03:45-04:38)
• He emphasizes his role as Governor, avoiding political commentary and focusing on confidential dialogue.

“I'm not going to use my pulpit to, in a sense, contribute to the open debate that's going on.”
— Andrew Bailey (04:09)

5. UK Growth and Productivity: Post-Brexit, Pandemic, and Beyond

• The Governor argues the UK’s trend growth slowdown dates to around the global financial crisis, not just Brexit or the pandemic. (04:44)
• He points to a widespread productivity slump tied to long-term technological and investment issues, hoping that AI and tech will offer a "substantial" lift over time. (05:38)

"Over... about 15 years... [there's been] a fall, particularly in productivity growth. By the way, the UK cause is not unusual in this respect."
— Andrew Bailey (04:44)

6. AI, Bubbles, and Private Credit

• Bailey warns of both the potential productivity boom and the bubble risk from AI, likening it to past general-purpose technologies. (05:43)
• He cautions about opacity in private asset markets and stresses the need for transparency so confidence is maintained, referencing lessons from the financial crisis. (07:00)

Notable Quotes:

"It is perfectly possible that we could both see AI be the next ... dial move in terms of productivity... [and] that we could get a bubble."
— Andrew Bailey (05:43)
"Opacity is something that can be, you know, difficult and dangerous in terms of confidence."
— Andrew Bailey (07:46)

7. Responding to Pressure: Farage Comments and Term Commitment

• Responding to Nigel Farage’s call for new leadership, Bailey reaffirms his intention to serve his full term.
• He describes his meetings with Farage and Richard Tice as "cordial" and emphasizes his commitment to independence. (08:20)

Notable Quote:

"I made a commitment to serve out my whole term. That's what I intend to do. And there's no, no desire to change."
— Andrew Bailey (08:30)

Timestamps for Key Segments

• 00:38 – Balancing inflation risk and economic slowdown
• 01:24 – December rate decision: which data will matter
• 01:48 – Assessing terminal rate uncertainty
• 02:51 – Road toward neutral rates and possibility of longer pauses
• 03:45 – Fiscal policy and working with the Chancellor
• 04:44 – Long-term UK growth and the role of innovation
• 05:43 – Risks and opportunities with AI and private credit
• 08:20 – Bailey’s response to Farage and term commitment

Memorable Moments

• Bailey stands firm on independence and transparency, repeatedly referencing the dangers of market "opacity" and need for solid data.
• His comparison of AI innovation to the steam engine and internet (05:43) offers a forward-looking view of technology’s role in economic growth.
• The candid dismissal of political pressure, especially Farage's, reflects his dedication to his position and to the governance of monetary policy. (08:30)

Summary

Governor Andrew Bailey provides a nuanced look at the UK’s monetary policy crossroads, voicing both caution and pragmatism. He is clear-eyed about inflation, candid about the limits of central banker foresight, keen on private market transparency, and unbowed by political noise. The episode provides essential context for anyone following UK economic policy, with insights into the BoE’s thinking as it steers through turbulent times.