BOE Chief Bailey Forgoes Pay Rise After Urging Restraint

(Bloomberg) -- Bank of England Governor Andrew Bailey said he won't take a pay rise this year after asking high earners to help keep inflation in check by holding off on making aggressive demands.

The central bank chief, who receives total compensation well in excess of 500,000 pounds ($618,000), said he asked the court that sets executive pay at the BOE to hold his wage steady this year. Most staff will get 1.5% pay raises, well below the pace of consumer prices growth.

“I have turned it down,” Bailey said in an interview on Thursday with Channel 4 News in London. “Our board asked me, and I said I think it's best I don't do that. I don't want to preach to people about what they should and shouldn't do. I'm doing what I think is right for me.”

The governor caused an uproar in February when he said he needed to see “moderation in wage rises” at a time when inflation is delivering the biggest squeeze on consumer spending power since World War II. His predecessor, Mark Carney, also regularly turned down pay rises.

The BOE on Thursday said it expects inflation to top 10% this year, slowing the growth of the economy and adding to risks of a recession. Policy makers boosted the key lending rate to 1%, the highest since 2009, and signaled more increases may come.

Britain's labor market has tightened quickly since pandemic restrictions were loosened, with many companies offering bigger salaries to draw in workers. Hospitality and leisure companies have been especially hard hit by shortages of staff available to fill jobs, threatening to feed an upward spiral in wages and prices.