LONDON (Reuters) – Bringing inflation back to its 2% target will be “tough work” because its recent fall is mainly due to falling energy prices, the governor of the Bank of England (BoE) said , Andrew Bailey, in an interview with the ChronicleLive site published Monday.

“What remains (of inflation) must be addressed through political measures and monetary policy,” Andrew Bailey said.

“Monetary policy currently is what I call restrictive – it restricts the economy. The road ahead to bring inflation down to 2% will be difficult and we obviously don’t want there to be more damage.” .

The BoE kept rates at their current levels for a second consecutive meeting in early November, after 14 successive increases aimed at bringing inflation under control.

Price momentum peaked at over 11% just over a year ago, before falling back to 4.6% in October.

According to its latest forecasts, the BoE expects inflation to return to 2% only at the end of 2025.

Andrew Bailey acknowledged that rising rates were impacting households by making mortgages and rents more expensive, but the governor insisted it was too early for the BoE to consider cutting interest rates.

“I am very aware of the situation faced by those most deprived,” he told ChronicleLive.

“But we need to get (inflation) down to 2% and that’s why I’ve been pushing back against assumptions lately that we’re talking about cutting interest rates or that we will cut them in the foreseeable future, because “It’s too early to have this discussion.”

Financial markets are currently betting that the BoE will have implemented a 25 basis point rate cut by September next year.

(Editor William Schomberg, Corentin Chappron, edited by Kate)

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