Bank of England Outlook by Governor Andrew Bailey

LONDON (Reuters) – Bank of England Governor Andrew Bailey reiterated in an interview published on Wednesday that gradual cuts in interest rates are likely over the next year, adding that the process of falling inflation is well embedded.

> "This sort of disinflation process is now well embedded," Bailey told the Financial Times Global Boardroom event.

Bailey acknowledged that while inflation had come down to target over the summer, there was still a distance to travel. He noted that British inflation jumped by more than expected in October, rising back above the BoE's 2% target with underlying price growth accelerating.

Following comments from Bailey that the BoE expects four interest rate cuts next year, the Sterling fell against the U.S. dollar. He emphasized that this expectation was reflected in financial markets and incorporated into recent economic forecasts.

When asked whether companies should anticipate four rate cuts next year, Bailey responded: "We always condition what we publish in terms of the projection on market rates, and so… that was effectively the view the market had – we emphasized in that report the word 'gradual.'"

Bailey also commented on the complex relationship between potential increases in protectionism and rising trade tariffs, especially with a possible return of Donald Trump to the White House. He noted that estimating their impact on inflation is "not straightforward at all," as it interacts with traded prices and depends on how other countries and exchange rates react.