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Mr Bailey said that despite “big strains” on parts of the global banking system that he was confident UK banks were “resilient, with robust capital and liquidity positions”. He added they remained in a good place “to support the economy”.
He said: “Recently, the evidence has pointed to more resilient activity in the economy, and likewise employment; signs that nominal wage growth has been rather weaker than expected; and two months in which there was first some downside news on inflation relative to our expectation and then a bit more upside news.
“This reminds us that the path of inflation will not be entirely smooth and cost and price pressures remain elevated. We have a strong macroprudential policy regime in this country.
“With the Financial Policy Committee on the case of securing financial stability, the Monetary Policy Committee can focus on its own important job of returning inflation to target.”
High inflation has been a topic hitting headlines and the public’s pockets with the government and Bank of England aiming to lower the rate of inflation this year.
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Last week, the Bank of England raised the interest rate for the 11 successive time as inflation jumped to 10.4 percent.
Mr Bailey said he expected inflation to fall sharply this summer and he was feeling “more optimistic” following the raising of interest rates.
The Bank of England has had to weather a storm as the global banking system faced one of its toughest tests since the 2008 financial crash.
The problems were caused by issues with American bank Silicon Valley Bank and Credit Suisse.
SVB got into difficulties when customers withdrew their deposits quickly. In order to pay these deposits back, the bank needed to sell its assets at a loss.
This led to the failure of the bank and an intervention by the United States government. The UK branch of SVB was bought by HSBC for just one pound.
Soon after SVB failed, Swiss bank Credit Suisse encountered issues. It was bailed out by UBS.
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UBS purchased rival Credit Suisse for £2.65bn after Swiss authorities intervened to protect depositors and prevent a global banking crisis.
Swiss President Alain Berset described the takeover of Credit Suisse by UBS was “the best solution”.
The deal was welcomed by the Bank of England. In a statement, it said: “The UK banking system is well capitalised and funded and remains safe and sound.”
The banking sector is trying to avoid a repeat of the 2008 financial crash which saw the collapse of major banks such as Lehman Brothers and Northern Rock.
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