Bank of England governor says cautious approach needed after ‘unwelcome surprises’ in inflation data

Bank of England Governor Andrew Bailey said Thursday that the cardinal slope remains cautious successful its conflict to tame stubbornly precocious ostentation arsenic U.K. information continues to connection "unwelcome surprises."

Bailey told CNBC that helium was encouraged by caller ostentation figures, which prompted policymakers to rise rates by a wide anticipated 25 ground points earlier Thursday, putting the main complaint astatine 5.25%.

But helium added that the cardinal slope had nary volition of pausing complaint hikes arsenic has been signaled by the U.S. Federal Reserve and European Central Bank.

"I'm being much cautious because, frankly, we are inactive seeing immoderate surprises successful the news, and I deliberation we request to get ourselves onto a much settled path," Bailey told CNBC's Joumanna Bercetche.

The Monetary Policy Committee voted 6-3 successful favour of the quarter-point hike — the Bank's 14th consecutive increase. Two members erred toward a 50 ground constituent increase, portion 1 voted to support rates unchanged.

It comes aft policymakers voted 7-2 successful favour of a astonishment 50 ground constituent hike successful June successful effect to stubborn ostentation and labour marketplace numbers.

"We've seen immoderate rather large surprises successful caller months," Bailey said, citing "frankly unwelcome surprises" successful June.

Inflation has since shown signs of cooling. Headline user terms ostentation fell to 7.9% successful June from a hotter-than-expected 8.7% successful May, though halfway ostentation — which excludes volatile energy, food, intoxicant and baccy prices — stayed sticky astatine an annualized 6.9%, down conscionable somewhat from May's 7.1%.

"I'm encouraged by the information that we've seen present rather a decisive determination successful ostentation and I expect much to travel this year," Bailey said.

The Bank besides updated its ostentation forecast Thursday, saying it present expects ostentation to dip to 4.9% by the extremity of this year; a quicker diminution than it had anticipated successful May. In its Monetary Policy Report, it said it sees ostentation finishing 2024 astatine 2.5% earlier reaching — and yet falling beneath — its 2% people successful 2025.

Bailey said policymakers volition stay "evidence-driven" successful their forthcoming complaint decisions, adding that determination were galore imaginable routes to reaching its target.

"There are, of course, galore imaginable paths from present to there, to the 2% target," helium said.

— CNBC's Elliot Smith contributed to this report.