Bailey stressed the uncertainty created by increased employers' National Insurance contributions on job security and interest rates, stating a cautious approach is needed to monitor these effects.
He remarked that the hike in employer taxes represents one of the biggest uncertainties for monetary policy going forward, indicating potential softening in the labour market.
Over 70 major retailers have expressed worry that 'the sheer scale' of new costs from tax increases will lead to 'inevitable' job losses as they navigate financial burdens.
Bailey pointed out that inflation, particularly in services, remains too high, conflicting with the Bank's 2% inflation target, while household energy bills could drive CPI increases.
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