Bank of England (BOE) Governor Andrew Bailey said there was now more optimism about the prospects for inflation falling this year. Bailey told Wales’s Western Mail newspaper: “There is more optimism now that we are sort of going to get through the next year with an easier path there. What we think is the most likely outcome is that it (inflation) will fall quite rapidly this year, probably starting in the late spring and that has a lot to do with energy pricing,” he said.
Bailey said the British central bank did not target a peak for interest rates, but noted markets were now expecting BOE rates to rise no higher than around 4.5%, lower than before. “I am not endorsing 4.5%, but what you may have noticed in December is that we did not include the comment that we made in November about the market being in our view rather out of line,” he said.
Bailey also said he continued to expect Britain would see a recession, albeit “a shallow one by historic standards.”
