Andrew Bailey, the Bank of England governor, yesterday afternoon said there are signs that tax hikes are hitting pay and jobs – but there remains 鈥渦ncertainty鈥 over inflation.
鈥淚 am beginning to hear a bit more evidence of adjustments through pay and employment [rather than prices],鈥 he said.
鈥淭he labour market has been very tight in the past few years. But we are now seeing signs that conditions are easing,鈥
Regarding the potential for interest rate cuts in August and beyond, Mr Bailey reiterated that the BoE would seek to stamp out inflation by cutting slowly and when appropriate.
鈥淲hile the significant progress we have made on disinflation has allowed us to cut Bank Rate, we retain a restrictive monetary policy stance to squeeze out remaining persistence in inflationary pressures.
鈥淥verall, interest rates remain on a gradual downward path.
鈥淏ut monetary policy is not on a pre-set path, and at the June meeting, there was not a strong enough case to cut Bank Rate.
鈥淎s we meet for our August meeting in a few weeks鈥 time, we will assess the situation afresh.鈥