LONDON, July 14 (Reuters) – Bank of England Governor Andrew Bailey said on Tuesday that the resumption of hostilities between the United States and Iran in recent days had increased risks to financial stability.
“If you go back to the hearing we had on monetary policy a few weeks ago, I think I would have said, look, I think things are panning out at that stage, probably at the lower end of the three scenarios that we had painted in the MPR (Monetary Policy Report), but I would have added the very strong caveat to that it seems to me that the situation remained unstable, and the ceasefire was fragile.
“I think where I am now … instability has come to pass. I don’t certainly feel qualified to judge how long this is going to go on for in terms of this resumption of hostilities and how it’s going to end. But it underlines that this is going to going to be an unstable process for the foreseeable future,” Bailey told lawmakers on the Treasury Select Committee.
Last month, Bailey was part of the 7-2 majority who voted to keep the BoE’s main interest rate on hold at 3.75%.
(Reporting by William Schomberg and Phoebe Seers; writing by Suban Abdulla; Editing by William Schomberg)
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