LONDON (Reuters) -Bank of England Governor Andrew Bailey said on Thursday that a recent pickup in inflation created more uncertainty about the medium-term picture for price growth but he also noted signs of a slowdown in the jobs market in Britain.
“In recent months, the evidence that slack is opening up has strengthened, especially in the labour market,” Bailey said in a speech at a conference held by the British Chambers of Commerce.
“But there remain uncertainties around the overall balance between supply and demand in the economy as well as the remaining inflation persistence in the system.”
Bailey reiterated the central bank’s guidance on borrowing costs, saying rates were not on a pre-set path but were likely to come down gradually.
The central bank governor was among the majority of Monetary Policy Committee members who last week voted to keep borrowing costs on hold at 4.25%.
Investors are betting on the BoE cutting rates in two further quarter-point moves to 3.75% by the end of 2025.
Bailey said elevated global uncertainties continued to impact the UK economy but the direct impact from trade policies on world output could be smaller than initially thought.
“There have been significant moves in the oil price following the escalation of the conflict in the Middle East, although not always in the direction we may intuitively have expected,” Bailey said. “That only goes to show the unpredictability of events in the world today.”
(Reporting by William Schomberg; writing by Suban Abdulla)
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