BoE’s Bailey vows to do ‘what it takes’ to cut inflation to 2%

Governor of the Bank of England Andrew Bailey addresses the media during a press conference concerning interest rates, at the Bank of England, in London, Britain, Nov 2, 2023. HENRY NICHOLLS/Pool via REUTERS

LONDON  -Bank of England Governor Andrew Bailey said on Wednesday that the central bank “will do what it takes” to get inflation down to its 2 percent target, adding that he had not yet seen enough progress towards that goal to be confident.

Bailey and other top officials have sought to counter investor speculation about when the BoE might start to cut borrowing costs from their 15-year high after a slowing of the country’s high inflation rate and signs of an economic slowdown.

“Two percent is our target and we will do what it takes to get there,” Bailey said in an interview with Daily Focus, a news service in central England. “We are not in a place now where we can discuss cutting interest rates – that is not happening.”

“We need to see how the final part of the journey down to 2 percent inflation plays out; we have not seen enough of that journey yet to be confident.”

READ: UK inflation rate cools by more than expected

Bailey said this week that getting inflation down to 2 percent will be “hard work” as most of its recent fall was due to the unwinding of the jump in energy costs last year.

The central bank kept rates on hold for a second consecutive meeting this month after 14 increases in a row to tackle an inflation rate that peaked above 11 percent just over a year ago before falling to 4.6 percent last month.

The country’s budget watchdog downgraded its economic growth outlook for Britain last week to 0.7 percent for next year from the 1.8 percent it had estimated in March.

READ: Sluggish UK economy staged partial bounceback in August

Bailey acknowledged that there was “some weakening of economic activity,” adding that it was a “realist view” not “ultra-pessimist” as some critics have alleged.

“We’ve got to get on and bring inflation down to our target of 2 percent. That is the best thing we can do for growth in the economy – and we will do it.”