The Bank of England is “much nearer” to ending its run of interest rates increases but borrowing costs might still have further to rise because of stubborn inflation pressures, Governor Andrew Bailey said on Wednesday.

“I think we are much nearer now to the top of the cycle. And I’m not therefore saying we’re at the top of the cycle because we’ve got a meeting to come,” Bailey told lawmakers.

“But I think we are much nearer to it on interest rates on the basis of current evidence.”

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The BoE has raised rates at each of its last 14 meetings as it grappled with the highest inflation rates among the world’s big, rich economies. It is expected to raise borrowing costs again later this month, taking Bank Rate to 5.5%.

British two-year and 10-year gilt yields fell to their lows of the day after Bailey’s comments to parliament’s Treasury Committee.

He also said British inflation was heading for a further marked fall but it was not yet clear whether that would slow the pace of wage growth which recently hit a record high.

“Many of the indicators are now moving as we would expect them to move and are signalling that the fall in inflation will continue and, as I’ve said a number of times, I think will be quite marked by the end of this year,” he said.

“The question now is as headline inflation comes down … will we see inflation expectations continue to come down? … And will that be reflected into wage bargaining?”