Bank of England Governor Addresses Inflation Concerns

In a recent Treasury Committee hearing, Bank of England (BoE) Governor Andrew Bailey highlighted that the likelihood of second-round inflation effects is decreasing, attributing this trend to the UK's weakening economy.

"While we anticipate and are starting to observe an increase in inflation, it's significantly less severe compared to previous years," Bailey remarked. He pointed out that the primary drivers behind this inflation uptick are the rising costs of energy and food.

Economic Outlook Remains Uncertain

Bailey emphasized the ongoing uncertainty surrounding the economic outlook, noting that risks are present on both sides. Concurrently, BoE Chief Economist Huw Pill stressed the importance of remaining alert to "new shocks" and indicated that the current evidence does not support the notion of more rapid interest rate cuts.