ISTANBUL 

The Bank of England (BoE) Governor Andrew Bailey said Friday it is too early to declare victory against inflation.

"Recent experience leads me to be cautiously optimistic that inflation expectations are better anchored as a result of the regimes we have in place," he told the annual Jackson Hole symposium in the US state of Wyoming. "The second round inflation effects appear to be smaller than we expected."

Consumer inflation in the UK annually rose 2.2% in July, accelerating from a 2% year-on-year gain recorded in June, which is also the central bank's target.

The BoE on Aug. 1 cut the bank rate by 25 basis point, from 16-year high, down to 5%.

Bailey said headline inflation has fallen sharply since the coronavirus pandemic as energy and food prices, in particular, have decreased. Some inflationary pressures still persist, he added.

He said the UK sees a lower level of inflation persistence than it expected a year ago, adding: "We need to be cautious because the job is not completed – we are not yet back to target on a sustained basis."

"Policy setting will need to remain restrictive for sufficiently long until the risks to inflation remaining sustainably around the 2% target in the medium term have dissipated further. The course will therefore be a steady one," he said.