Asked about the return of bonuses for bankers, Mr Bailey said he was making an egalitarian point. Well-paid workers are more likely to be able to ask for pay rises, raising the risk that their higher earnings will cause more inflation to the cost of those low-paid staff who have less power to secure a raise, he said.
“In a process where people try to offset the shock to real incomes, some will be better able to do it than others,” the Governor said.
“My big concern is that the least well off will come off worst in this process if we don’t have some process of thought and restraint in there.”
Asked about his own income compared to that of care home workers, the Governor was unable to give a precise figure for his salary: “It is somewhere over £500,000 – I cannot tell you exactly what it was, I don’t carry that around in my head,” he said.
Jonathan Haskel, an external member of the Monetary Policy Committee, compared the risks of wage and price rises to the situation of a crowd at a cricket match.
“If everybody stands up, nobody gets a better view. We don’t want everybody to be chasing each other,” he said.
“We don’t want this blip of high gas prices, and possibly high oil prices coming down the track, to turn into a permanent, embedded form of inflation.”
Ben Broadbent, a deputy governor, said energy prices were rising at an unprecedented rate even before the invasion of Ukraine: “Clearly the main source of risk at the moment is prices of energy and other globally traded goods.”