The Bank of England governor Andrew Bailey has warned the risks around inflation and the financial markets remaining jittery over the Chancellor is casting doubt over a base rate cut.
Speaking to a committee of MPs Bailey said he “more concerned” over the weakness within the labour market and there is “considerably more doubt” of interest rates being cut.
The consumer prices index (CPI) which measures inflation is set to rise to 4% the central bank project, which is double the BoE’s 2% target.
He said that the main driver is the increase in food prices and the finger is also being pointing to the Chancellor’s increase of tax on employers.
Bailey said, “There is now considerably more doubt about when and exactly how quickly we can make those further steps.”
He said that the financial markets are remaining more cautious over the pace of the cuts.
“That’s the message I wanted to get across”, he told the Treasury select committee.
“Now, I think actually, judging by what’s happened, certainly to market pricing since then, I think that message has been understood.”
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