LONDON: Bank of England Governor Andrew Bailey said inflation data for September, which failed to fall as most economists predicted, was not far off what the central bank had expected, adding that a slowdown in core inflation was “quite encouraging”.
Consumer price inflation (CPI) unexpectedly held at 6.7% in September, remaining the highest of any major advanced economy - which some investors thought boosted the possibility of another rise in interest rates.
In an interview with the Belfast Telegraph published on Friday, Bailey said the central bank had not been expecting “much change” in the data anyway.
“It was not far off what we were expecting. Core inflation fell slightly from what we were expecting and that’s quite encouraging,” Bailey said.
The annual rate of core inflation - which excludes food and energy prices - cooled to 6.1% in September from 6.2% in August. Bailey expected to see a “noticeable drop” in the headline rate of inflation when October figures are released thanks to the sharp rise in energy prices last year falling out of the annual comparison.
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On the labour market, he pointed to wages as an area of concern for the BoE. “Pay growth as measured is still well above anything that’s consistent with the (inflation) target,” he said.
“I understand, though, that people will want to see the evidence that inflation is coming down. I think we can see that evidence. I think that by the end of the year, we’ll see more evidence of that.”
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