In an interview with ChronicleLive, BoE Governor Andrew Bailey pointed out that the recent decline in inflation is largely attributed to the unwinding of last year’s surge in energy prices.
He highlighted two important phases in the inflation reduction process. He anticipates that by the end of the first quarter next year, inflation may fall to just “under 4%”, leaving an additional 2% reduction to reach the BoE’s target.
This remaining gap, Bailey noted, is the challenging part, emphasizing that “the second half, from there to two, is hard work.”
Moreover, Bailey explicitly pushes back against assumptions of imminent interest rate cuts, stating it’s “too soon to have that discussion.”