The Governor of the Bank of England justifies the reason for the decision to cut interest rates in today's meeting.

After the Bank of England decided, following the conclusion of the Monetary Policy Committee meeting on Thursday, to cut the interest rate by 25 basis points, bringing the UK interest rate to 4.75%, the Governor of the Bank of England, Andrew Bailey, made a number of important statements during the subsequent press conference after the decision was announced.

Among the key statements made by Bailey were the following:

• We still need to see a further and broader decline in inflation in the services sector, which would reinforce the stability of the Consumer Price Index at the 2% level.
• The gradual approach to reducing interest rates will give us time to assess the impacts of various risks.
• Conditions in the UK labor market are mixed.
• The Bank of England's survey showed that expectations for the growth rate of corporate payments have stabilized at 4% in recent months.
• There may be persistent upward pressures on wage inflation beyond what is contained in the Bank of England's forecasts.
• The budget has an upward impact on inflation but returns to target, which allowed us to cut interest rates at today’s meeting.
• We will need to see more about how the budget affects inflation.
• I do not think it is correct to conclude that the path of interest rates will be completely different because of the budget.
• The rise in bond yields is due to the fact that this budget is completely different from how it was after some other financial events in the past two years.

Regarding developments in the US; the Governor of the Bank of England spoke about the following points:

• We are working with all US administrations on financial regulation and look forward to working with the new Trump administration.
• We are not making any assumptions about the future policy of the Trump administration.
• We will closely monitor what the Trump administration does regarding trade.
• I am sure there will be a very open dialogue between the British and American administrations.
• The US elections have moved markets since last Friday afternoon.
• Markets are now largely stable.