Published by Global Banking & Finance Review®
Posted on August 7, 2025
1 min readLast updated: January 22, 2026
Add as preferred source on GoogleBank of England's Bailey highlights unexpected consumer caution following interest rate cuts, emphasizing risks from food and energy prices.
LONDON (Reuters) -Bank of England Governor Andrew Bailey said consumers have been more cautious than policymakers had expected, speaking after the bank cut interest rates to 4% from 4.25% on Thursday.
"Consumers appear to remain more cautious than we have expected, perhaps exacerbated by broader downside risks to activity and the risk of more sudden adverse developments in the labour market," Bailey said at a press conference.
"Food and energy prices are salient to consumers and often affect inflation expectations more than other prices, so we have to be very careful that this does not lead to any additional second round effects on wage and price setting in the economy."
(Reporting by William Schomberg, David Milliken, Suban Abdulla and Alistair Smout, writing by Sarah Young, editing by William James)
Andrew Bailey stated that consumers have been more cautious than expected, influenced by broader downside risks to economic activity.
The Bank of England cut interest rates from 4.25% to 4% on Thursday.
Bailey noted that food and energy prices significantly impact inflation expectations, and caution is needed to avoid additional second-round effects.
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