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Bank of England Governor Sees Inflation Decline, Urges Pay Restraint

Bank of England Governor Andrew Bailey has stated that there are strong downward forces on inflation in the coming year, but the Bank has raised interest rates due to concerns over inflation persistence. The Monetary Policy Committee remains worried about inflation's persistence.

Bank of England Governor Andrew Bailey
Bank of England Governor Andrew Bailey

Inflation Projection Indicates a Decline

The Bank's projection indicates that inflation will probably fall below 5% by the end of the year. Bailey attributes the decline to energy prices and strong base effects.

The Wedge Between Private and Public Sector Pay

Bailey was questioned on the impact of big pay rises on inflation and noted a growing gap between private and public sector pay growth. He stated that the impact of pay rises on inflation depends on how it's funded, but the Bank of England would not want to be involved in this territory.

Urges Forward Thinking on Pay Demands

Bailey urged all parties to be forward-looking in terms of pay demands and consider the expected rapid fall in inflation.

Interest Rates 'Too High Right Now

MPC member Silvana Tenreyro stated that a fall in inflation is guaranteed but warned that only a fifth of the recent interest rate rises has affected the economy.