In an interview with the Financial Times, BoE Governor Andrew Bailey acknowledged that while inflation had recently dropped to target levels, there remains “a distance to travel” in managing price stability. He noted that inflation might temporarily exceed target levels again ahead.
Bailey addressed market expectations for four rate cuts next year, emphasizing that BoE’s projections are “conditioned on market rates” and highlighting the word “gradual” in their approach.
On the impact of Donald Trump’s return to the White House and the associated rise in tariffs, Bailey described the effects as “not straightforward at all.”
He explained that such policies could move traded prices but are also contingent on reactions from other countries and exchange rate adjustments, adding further uncertainty to the inflation outlook.
