The governor pointed to subdued economic activity and a softening labor market as important factors helping to contain inflationary pressures. According to Bailey, broader domestic inflation is slowing, while weak demand is limiting businesses’ ability to pass higher costs on to consumers. Household inflation expectations have declined from previous highs, even if they remain elevated. Bailey stated that current market pricing reflects risk premia rather than the Bank’s central expectations for the policy rate and suggested that the interest-rate curve is in a “reasonable position”. By directly challenging expectations of a potential pre-emptive rate hike, Bailey signalled that policymakers remain comfortable waiting for clearer evidence of inflationary spillovers before considering any tightening response.