Bank of England governor Andrew Bailey said on Thursday that the disinflation process in the UK is faster than expected, but the policymakers still need to see services inflation coming down more broadly. He also cautioned that there could be lingering persistence in wage inflation pressures beyond the bank's forecast.
In addition, the official said it's not for the BoE to judge on merit of national insurance rise but to respond to inflation impact. He added that a gradual approach to cutting rates will help give the BoE time to assess the impact of the employers' national insurance contributions (NICs) rise and other risks, as well as allow it to watch budget effects. According to Bailey, the budget does have an upward impact on inflation but it does return to the target and has allowed the policymakers to cut rates today.
The BoE's boss also noted that he does not think it is right to conclude that the interest rate path will be very different due to the budget.