BoE’s Bailey highlights persistent concerns over services inflation and wage trends

During an appearance the House of Lords Economics Affairs Committee, BoE Governor Andrew Bailey highlighted that UK’s inflation rates have fluctuated, slightly overshooting last month and slightly undershooting this month. The development balanced out to “pretty much leaves us where we were”.

He noted the inflation trend were “obviously encouraging” potential worse outcomes. However, he emphasized that services inflation is at levels that are “not compatible with a 2% sustained inflation target”. Meanwhile, pay growth reduction was “just not quite as far as we thought.”

Bailey’s observations come after the latest CPI data remained steady at 4% in January, with core CPI also unchanged at 5.1%. Bailey’s comment suggested that this week’s data s unlikely to prompt immediate policy shifts.