LONDON (Reuters)

Bank of England Governor Andrew Bailey said on Thursday that a recent pickup in inflation has created more uncertainty about the medium-term outlook for price growth. He also noted signs of a slowdown in the jobs market in Britain.

Bailey stated, “In recent months, the evidence that slack is opening up has strengthened, especially in the labour market,” during a speech at a conference held by the British Chambers of Commerce.

He acknowledged ongoing uncertainties regarding the overall balance between supply and demand in the economy, as well as persistent inflation in the system.

Bailey reiterated the central bank’s guidance on borrowing costs, clarifying that rates are not on a predetermined path but are likely to come down gradually.

The central bank governor was among the majority of Monetary Policy Committee members who recently voted to maintain borrowing costs at 4.25%. Investors are anticipating that the BoE will cut rates in two further quarter-point adjustments to 3.75% by the end of 2025.

He noted that elevated global uncertainties continue to affect the UK economy. However, he suggested that the direct impact from trade policies on world output might be smaller than initially expected.

Bailey added, “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.” He concluded by highlighting the unpredictability of global events today.