Andrew Bailey said the Bank of England was getting its “sleeves rolled up” to fight inflation, as he ruled out interest rate cuts yet again.
In an interview with the Daily Staffordshire, the Bank’s governor said “we are not in a place now where we can discuss cutting interest rates.”
“That is not happening,” he added.
His comments were the latest in a series of statements from rate-setters at the Bank, who are pushing back against market expectations that rate cuts will begin in the first half of next year.
Although inflation fell precipitously to 4.6 per cent last month, Bailey highlighted that further falls in inflation will be much more gradual.
October’s sharp fall was largely due to a rapid rise in energy prices last year falling out of the annual comparison.
“I’m afraid we are not going to have another month of reduction like last month,” he said. Instead, future progress on inflation will depend on tighter monetary policy bearing down on the home grown elements of inflation, such as high wage growth.
However, higher interest rates are weighing on the UK’s growth outlook for the coming years. A slew of forecasters have downgraded their expectations for UK growth next year, while the Bank forecasts sluggish growth for two years.
Earlier this week, Bailey said the UK’s potential growth rates were lower than they had been in much of his working life. His comments attracted ire from some politicians, who accused the Bank’s governor of talking down the UK.
Bailey hit back at these comments. “I’ve been written up this week as being an ultra-pessimist but I don’t see it that way. I see it as a realist view,” he said.
“That translates to us getting our sleeves rolled up and tackling the issues we face,” Bailey added.