andrew bailey, the committee split in favour of the cut. the reasons why that cut has been made today. the interest rate the lowest since 7 2.021. . . 7 2b23.i~e” , , 7 25023.zwe:will: , 2023wew|llhand " % w 2b23. zwezwill hand you is 7 is the 7 7 is the bank 7 f is the bank of 7 i is the bank of england abouttbe win conference talking about the cut in interest rates which has just been rim 5556619712356 me. session en today's j and the j = -:z report. we 5 j report. we are 7 7 report. we arejoined j report. we arejoined by report. we are joined by the; policy report. we are jolnedbythe deputy governor for monetary bank's deputy governor for monetary policy and governor �* bailey. bank's deputy governor for monetary pol will nd governor �* bailey. bank's deputy governor for monetary pol will start ivernor �* bailey. bank's deputy governor for monetary pol will start ivern some �* bailey. bank's deputy governor for monetary pol will start ivern some introductory it and then . . . . and then moved . .

. . and then moved to . . . and then moved to questions = -: cut cufithe u; 7 cuflhe bank 7m 7 cufithe bank rate .».. cuflhe bank rate by 0.25 have cut the bank rate by 0.25 percentage points to 4.5%. the we have to reduce progress we have made to reduce pressures we have been intln�*:ann—|l n—a--..—a- um k-um loun- hummumy p.essu.es we have been to inllnbiana—u n—a-...—a. uux kn|la kaan hummumy p.essu.es we have uccll to take inllnbiana—u n—a-...—a. uux kn|la kaan nnlabbnmy p.essb.es we have been to take another inllnbiana—u n—a-...—a. uux kn|la kaan nnlabbnmy p.essb.es we have been to take another step inllnbiana—u n—a-...—a. uux kn|la kaan nnlabbnmy p.essb.es we have been to take another step to able to take another step to make monetary policy less restrictive. will; wing” " 7' willfbéne'fcgh}; " 7' willfbéne'fcgh}; {o 7' will be welcome to many. this will be welcome news to many. we expect to be able to cut back rate further as disinflation rate further as the disinflation continues. but we will have rate further as the disinflation judge intinues. but we will have rate further as the disinflation judge meeting but we will have rate further as the disinflation judge meeting bytwe will have rate further as the disinflation judge meeting by meeting have rate further as the disinflation judge meeting by meeting how far two judge meetingbymeetinghow far” how fast. we live in an two judge meetingbymeetinghow far” how�* world �*e live in an two judge meetingbymeetinghow far” how�* world effe in an ahead uncertain world and the road ahead will have bumps it. we expect ”wt; 7” ., - . to increase this year a inflation to increase this year to a of about 3.7% returning zs target. me zs target. we will set bank to the 2% target. we will set bank rate to that it does rate to ensure that it does so sustainably. low and stable is the at a and we 777777 777 "gnaw 777777 7 777and7w7ew7il7ldo to7 7 to continue

to 7continue to to continue to ensure to 7continue to ensure that. i job to continue to ensure that. i now the outlook for will now describe the outlook for inflation the inflation in more detail. the we face before uncertainties we face before concluding on the decision we have today. chart one that has taken today. chart one that has come up taken today. chart one that has come up shows the �*12 month up shows the development of 12 month consumer price inflation since 2021, consumer price infletion since quit. is the white it shows that is the white line. it shows how headline inflation fell sharply into 7before through 2023 and into 2024 before reaching the 2% target was the of last in shaded on 7 on the 7 777 77o7n7th7e7ri7ght, 7 7 7 7 77 7 777 77o7nthe7ri7ght,yo7u7 7 77 7 777 77o7nthe7ri7ght,yo7u7c7a7n 7 7 on the right, you can see how area on the right, you can see how we now expect inflation to increase about 3.7% towards the middle 7about737.77;/e7towa7rds the not 7of year ”fife— year as negative contributions 77 77energy energy prices, that 7 energy prices, that is 7energy prices, that is the bars, 7 bars 777fad7e77a7nd 7 7 bars 777fad7e77a7nd then 7 positive. positive. some pc pressure some pc pressure from he es 779662175777 .. .. we... .. .. 7797008; p7rice7s,7777 77 7 77 7797008; p7rice7s,7777 is 7 77 7797008; p7rice7s,7777 one" 779700875 p7rice7s,7777 {sienna end goods. prices. inst. is. the. purple blue snd gddds drisss. dist. is dis durdis blue this snd dddds drisss. inst. is shs durdis blue this is a four end blue odrs. this is s four . ,,. . - higherthan end lelue leers. this is e four . ,,. . - higherthan we

november. 7 november. but behind uptick in headline inflation, continued gradual easing of stands a continued gradual easing of inflationary pressures in underlying infletionerrypressures'in" uk economy. this is the backdrop oui’ 7 ou7r7withdrawal 7 7 “zaifw'iiaaeeisf' 77 77 7 7 77ou7r7w7ithdrawal of 7 policy us us into our policy 7 7 restricting us into our policy today. as 2—macro decision today. as chart 2—macro shows, and the prices of shows, inflation and the prices of services has been coming down since 77 middle777777777 77 77 middleof7777777 77 77 middleoflast77 77 77 77 77 middleoflast77 77 is; 77 77 middleoflast77 77 7thatis77 77 "medias 77 77 fhéi is7the777 the middle of last year, that is the blue line. the latest blueline. the latest data for �* services blueline. the latest data for �*services inflation blueline. the latest data for �* services inflation fell december services inflation fell more than expected to 4.4%. some of surprise driven 7777sl77ir7pr7is7e777777driven7by 7 7 77 7 77st7ir7pr7is7e777 7 77driven7by smaller 7 that surprise was driven by smaller than expected airfare. higher measures of underlying price asures of underlying price inflation, inde77rlying price inflation, whieh ying services price inflation, which can be indicative of near—term inflation momentum, have remained lower than momentum. neve rerneined lower then” — u, rates. momentum. neve rerneined lower then” — ,-, rates. this points to of further moderation in prospect of further moderation in underlying services price inflation.

remains an important 7behind the 7 7behind the remaining factor behind the remaining persistence in services price annual growth in private inflation. annual growth in private sector regular average weekly sector reguler everege weekl�*e' increased to 6% in sector reguler everege weekly increased to 6% in the months 7 7 monthsto 7 7 monthsto 7 this three months to november. this may suggest the disinflationary process has slowed in recent months. the has been mixed. the other measures has been mixed. the bank started indicator model has recently as chart three pletee’ued recently es’che rt three but it still to a �* rate wage �*rate wage than �* rate wage than the lower rate of wage growth than the awp and the banks awp end both thesbenks decision �* panel and our agents annual maker panel and our agents annual survey point a in pay survey point to e softening in growth pay survey point to a softening in growth this year to dress wage growth this year to dress below 4% and respectively. while we inflation 7 inflation to 7 inflation to rise 7 inflation to rise again, it expect inflation to rise again, it is to factors that not linked to underlying

directly linlsed td undertying cost price in the economy. and price pressures in theemnomv fact is that we expect to be tn test is thet fisssesftffies chart �*shows tn test is thet fisssesftffies chart �* shows a of this. 77 7 777ofthi7s.7t7h7e 7 7 77 7 777ofthi7s.7t7h7e combined decomposition of this. the combined of regulated price changes effects of regulated price changes and fiscal measures may add around half percentage point of inflation half a percentage point of inflation towards the middle of this year. poor goods and food price inflation measure also ticked up but the geesgurs elso'ticked ucr'dut the driver is signgleglargest driver is household with current energy bills. with current expectations for prices, expectations for wholesale prices, energy prices may contribute as three quarters of a as three quarters of a percentage the winter has point. the winter has been colder than expected in and that has to an in iiar led to an increase in demand for natural gas suppliers remain natural gas whilst suppliers remain tight. this chart shows wholesale gas. .s 7's sc.——fss:—f . 7 gas future prices have

gas future prices have risen 20% since our november report. moose since our�*iiovember redort. increase in gas toeost'sinceoufliovember redort. increase in gas prices led to 7 led to an 7 led to an increase in the off has led to an increase in the off gem price cut for uk household energy bills current it 7i7t77w7il7l the? 7 7|7t77w7il7l effectthe 7 7 7 7 7it77w7il7l teenage; 7 7 7 7 7it77w7il7l suitcase; 7 quarter. it will effect the cap for the quarter of this year when the second guerter of this yeer when” ' is announced of gem later this but gas 7 7 but gas future77 but gas future7 remain month. but gas future prices remain lower than in 2022 and month. but gas future prices remain little iwer than in 2022 and month. but gas future prices remain little change n in 2022 and month. but gas future prices remain little change further 22 and month. but gas future prices remain little change further out. d they are little change further out. while energy volatile and while energy prices are volatile and to ped�*“ . our while energy prices are volatile and to ped"r . our development hard to predict, is our development help to limit further in 7,7i, 2: stage” energy in energy prices. monetary increases in energy prices. monetary policy cannot prevent such short—term influences on nor it respond to jgfglgagtjgn. nor should it respond to that will fade by the factors that will fade by the time it take its effect. but we should recognise the short term pick—up in introduces further diet“? new term 7777 it; 7l717t7ili7t7y and ”rhee; 7l717t7ili7t7y and 7 7777pric7e7s77a7re7 7l717t7ili7t7y and 7 7777pric7e7s77are7sa7li7er7itti7li7t7y and 7 7777pric7e77s77a7r7e7se7li7er7it77t7il7t7he nd

food prices are salient to the consumer and we have to make sure that temporary increases in them do 5:1.sz iefiéfirdfii incrsesss ifi. then- tit? feed 5:1.sz tsmddrery incrsesss ifi. then- tit? feed through to lasting second not feed through to lasting second effects on wages and other round effects on wages and other with the underlying prices. with the underlying under a continued way and a continued restrictive start of monetary policy in place, we can be reasonably confident that 777 7p7ick—up pick_up7i;77 :. "risers”? pick—up in inflation we see the pick—up in inflation we see ahead of us will be temporary. and much smaller and less prolonged than one we have put behind us. the one we have just put behind us. today labour is cooling, today the labour market is cooling, the context is one a weakening in the context is one of a weakening in activity. intelligence economic activity. intelligence from the banks agents firms are reluctant or increasingly either reluctant or unable to pass through course to given give7n subdued consumer prices given subdued demand. are signs the stance restrictive stance of monetary policy to work to reduce policy continues to work to reduce inflationary pressure in the so looking further ahead, inflationary pressure in the february looking further ahead, inflationary pressure in the february looking fu which 1ead, inflationary pressure in the

february looking fu which is ad, our february production which is conditional on implied ifififiiiififidl iiifi. the merisst iftélieti for interest rates, this art for interest rates, this suggests the consumer price inflation will pick up peak this year at around 3.7% and then fall steadily back to the 2% target over the rest of forecast period. in steadily back to the 2% target over the rest of the ecast period. in steadily back to the 2% target over the rest of the return eriod. in steadily back to the 2% target over the rest of the return of od. in our projection the return of inflation to target is by inflation to target is supported by an of economic slack the7777 7 the uk 7 7 the uk economy. 7 7 the uk economy. ac7tivity 7 the uk economy. ac7tivity in 7 the uk economy. ac7tivity in the 7 has 7 7 7 7 7 has wea ker has 7 weaker7than 7 7 7 economy has been weaker than expected last year. we now expect growth to7be notably weaker in new term before pick7ing new term before picking up the new term before oicising'uefrom middle of tbg new term before oicising'uefrom middle of the year. expect the new term before oicising'uefrom mii growth he year. expect the new term before oicising'uefrom mii growth rates ar. expect tbg new term before oicising'uefrom mii growth rates by expect tbg new term before oicising'uefrom mii growth rates by 2026 (pect similar growth rates by 2026 and 2027 as we did in there is ape? sews did—in november: there is uncertainty over the to 7 to which 77 7 77to7which7t7his7 7 to which this weakness in gdp be - . 7777h7eaee7rihea7 7 b7easc7rib7ed7to 77 7 7 beascribedtodemand 7 be ascribed to demand more to should be ascribed to demand more to supply. and so what that weakness means for inflation. of meaggggor inflation. metrics of and meagggtor inflation. metrics of and consumer meagsgtor inflation. metrics of and consumer confidence business and consumer confidence have deteriorated �* recent months

from the 7 7f7ro7n71 the ba7n7k7s77 from the banks agents and contacts from the banks agents report are more price and contacts from the banks agents report holding more price and contacts from the banks agents report holding back price and contacts from the banks agents report holding back on ce conscious'and'holding’back on this is with a spending. this is consistentwith a in demand. equally, the slowdown in demand. eguatty, the process has been disinflationary process has been slow, too. and both services price inflation and pay growth remain as levels.7 7 levels .7 p7rice levels.7 p7rice balances and elevated levels. price balances and surveys have one business surveys'have'increasedone' balances have fallen. this activity balances have fallen. this demand has been activity balances have fallen. this againstemand has been activity balances have fallen. this against the nd has been activity balances have fallen. this against the backdrop en activity balances have fallen. this against the backdrop of slowing against the backdrop of continued weakness the potential continued weakness and the potentials' capacity of the economy. our supply capacity of the economy. our february projections ascribes february projectionssascribes'much their weakness economic of their weakness in economic activity to supply. this means the more recent slowdown in has more recent slowdown in demand has so far led to only a more recent slowdown in demand has so farled to onlya margin more recent slowdown in demand has so far led to only a margin of 77 opening 77 7 opening up. 7 opening up. the7777 777 7 7 opening up. the output? 7 7 opening up. the output gap 7 slack opening up. the output gap widens gig? next slack opening up. the output gap widens gag? next couple slack opening up. the output gap widens 9ng next couple of years widens over the next couple of years of production to around three of the production to around three of the production to around three of a of potential quarters of a percent of potential before narrowing the gdp before narrowing towards the end of the this is

of the forecast period. this is consistent with current measures of of the forecast period. this is consi in nt with current measures of of the forecast period. this is consi in the iith current measures of of the forecast period. this is consi in the economy. t measures of of the forecast period. this is consi in the economy. both sures of of the forecast period. this is consi in the economy. both the es of of the forecast period. this is consi in the economy. both the level slack in the economy. both the level of and the ratio of vacancies and the ratio of vacancies to unemployment have returned close to pre—pandemic levels. the labour market -i- c..----li_- ll- i.l-....__...i.-l e??? 2,99-539 2:5 :,,, :==. |n in i would also that the ratio of 7 ’ ithattheratio’of 5.053” tha'e the ratio of broad money note that the ratio of broad money to gdp has returned close to its trend, though it's also �* its 77 �* its of 77 �* its of current of travel downwards. direction of travel is downwards. would expect process to continue, disinflationary process to continue, the balance between demand the balance between aggregate demand and supply is one of the main determinants of inflationary pressures in medium term. this pressures—in—themedlem term this the pressures—in—themeéium term this the path of bank will influence the path of bank rate. on the one hand, greater or lasting 7 77 lasting weaknessfand - to- .— rto suvaly 77 to supply would push down relative to supply would push down on inflationary are on inflationary pressures are consistent with a less restrictive path for bank rate. on the other path for bank rateanrthe other if path for bank rateaqnrthe other if supply is more constrained hand, if suppty ls morecortstzained to demand, hand, if suppty ls mdrecdrtstzained to demand, domestic wage price pressures could be

and price pressures could be sustained consistent with a and price pressures could be sustair path consistent with a and price pressures could be sustair path of :onsistent with a and price pressures could be sustair path of future ent with a in slower path of future reductions in bank rate. there are risks from the slower path of future reductions in bank r economy, are risks from the slower path of future reductions in bank r economy, too. isks from the slower path of future reductions in bank r economy, too. it(s from the slower path of future reductions in bank r economy, too. it remains he global economy, too. it remains unclear what form global trade might take policies might ultimately take and the mpc�*s production is not the mpc�*sproductidn is not change and global policy report sets out a framework of how terrace could monitor of how terrace could affect monitor output and let me output and inflation. let me conclude, our restrictive stance of poucysz 21? i’f"? " policy has reduced monetary/policy has reduced pressures in uk inflationary pressures in the uk with the progress we economy. with the progress we have made, we have able to take made, we have been able to take another in making monetary another step in making monetary policy little restrictive policy—ailittle—less restrictive the judgment policy—arlittle—less restrictive the judgment we will have to jets??? at our 7 at our future meetings is make'at qhf fbtbre meetings is inflationary whether underlying inflationary pressures in the uk economy are easy enough to allow further cuts bank enough to allow further cuts in bank rate. domestic visual pressures enough to allow further cuts in bank rate. and domestic visual pressures enough to allow further cuts in bank rate. and may estic visual pressures enough to allow further cuts in bank rate. and may estic visual a essures remain and may have eased a little more slowly than we last

that 7 that reaffirms importance flaking” taking gradual approach taking gradualapproach to the taking ofidualapproach to the 5 taking of monetary oach to the taking of monetary policy>the withdrawal of monetary policy on us. bank rate is not restrictive on us. bank rate is not on preset with increased ran a preset path.~v.!ith~increased and risk to on uncertainty and risk to inflation on both sides, from the near—term outlook uk activity in outlook to uk activity in inflation and in global and from developments in the global economy, we must also proceed carefully, judging the a at??? ateachv 7 at? each 7 7 based ateachv 7 based on the fresh at each meeting. based on the committees involving views of the for 77 for % inflation, careful approach to the gradual and careful approach to the further withdrawal of monetary restraint is a- ”roriate. and with that, claire dave so with that, claire dave and i be happy to take would be happy to take your questions. would be happy to take your questions-_ would be happy to take your cuestions. �* , . ~ ., questions. let's take questions now. if we stick questions. let's take questions now. if we - stick with _ questions. let's take questions now. if we - stick with one _ questions. let's take questions now. if we - stick with one and - questions. let's take questions now. if we - stick with one and see . if we could stick with one and see if we _ if we could stick with one and see if we have — if we could stick with one and see if we have - again _ if we could stick with one and see if we have - again to - if we could stick with one and see if we have - again to go - if we could stick with one and see if we have - again to go roundj if we could stick with one and see if we t please i again to go roundj if we could stick with one and see if we t please give ain to go roundj if we could stick with one and see if we t please give us to go roundj if we could stick with one and see if we t please give us your» roundj if we could stick with one and see i if we t please give us your» roun and again. please give us your name and who- are — again. please give us your name and who. are representing. - i i who you are representing. could i start_ who you are representing. could i

start. sam _ who you are representing. could i start. sam and— who you are representing. could i start. sam and then - who you are representing. could i start. sam and then edward? | “as the markets “as _ the markets have - star. 7 the markets have been governor. the markets have been gradualism is a quarterly taking gradualism is a quarterly pace of rate reductions. point to a expectations which point to a much pace of reductions. that slower pace of reductions. that leading to inflation onlyjust getting back to in three getting back to target in three do we need to rethink what years. do we need to rethink what gradualism means, why are you seeing such a slow disinfection = -: the cooling of economy given the cooling of the economy you are describing? you amplify by you mean by careful? it ylhétlw, mean by careful? asked the whole because you asked the whole question because i want be clear that should i want to be clear that you should see gradual and careful together. you also see from the minutes you should also see from the minutes the mpc you should also see trom the minutes the mpc that there was quite a of the mpc that there was'quite a about the of the word. there wasn't a debate segornd word. there wasn'tadebate éggggd word. there wasn'tadebate first word because we using that some time and i been using that for some time and i think, we have clearfor some that the word gradual has

time that the word gradual has really been by the committee in really been used by the committee in the context of our reading of the science of persistence science of inflation persistence obviously coming of the obviously coming out of the experience we had a few years ago, and how that persistence was wearing off over what it would wear i think we have seen good on n on that 7 n on that front 7 n on that front we progress on that front but we continue to use the word gradual because we to have to see because we continue to have to see that process of disinflation take that process of disinflation. take e, e as,” a. a a . as you that process of disinflation. take a, a as,” a. a a . as you rightly set out, we place; as'you tightly set out, we added the word and let me emphasise as deliberately and let me emphasise as i did that around that, you should the 7 the greater j the greater uncertainty that we see the greater uncertainty that we face in the current environment. and x.-- :. ll- ........._1. -._..:..-.___-._1. 1-4 huts-e in tile l—llllelll euvnuluueut, fluid l.-- i- ll- -......-._l -._..!..-.___-._l a._j del-e ii! lue l—ullel!l el!v|lul!l!!§l!l= aida isa|d, l.-- i- ll- -......-._l -._..!..-.___-._l a._j del-e ii! lue l—ullel!l el!v|lul!l!!§l!l= aida isa|d, that l.-- i- ll- -......--l --..i..--_---l a-j del-e ii! lue l—ullel!l el!v|lul!l!!§l!l= aida i said, that uncertainty l.-- i- ll- -......--l --..i..--_---l a-j del-e ii! lue l—ullel!l el!v|lul!l!!§l!l= aida i said, that uncertainty is l.-- i- ll- -......--l --..i..--_---l a-j del-e ii! lue l—ullel!l el!v|lul!l!!§l!l= aida i said, that uncertainty is both and j and global. j and global. the a is global. the f17%:i’ a is around the f17%:i’ uncertainty is around particularly as we have set out at length