Pill: Report to the Treasury Select Committee

This report covers the period from February 2025 to February 2026. I began this period believing that the overall trend of disinflation towards our target continued and so some further removal of monetary policy restrictiveness was likely to be appropriate. My subsequent voting record reflects my view that there have been two-sided risks to our central projection, but that the risk of inflation persistence has outweighed that of weaker demand over the past year. My voting record also reflects the high importance I have placed on ensuring inflation returns sustainably to target given we are now in the fifth year of inflation remaining significantly above 2%. In this rate cutting cycle, my monetary policy strategy has been one of risk management, in which I have weighed the costs of maintaining too much versus too little restrictiveness. I believe the cost of the latter is greater. Generally, the data over this period has suggested the disinflation process continued. The data has also shown the UK real economy to be more resilient than forecast (in year-on-year terms, particularly in the first half of 2025), though consumption had remained subdued and the labour market had loosened slightly more than we’d expected. I voted to cut Bank Rate last May, but then - given subsequent reductions in Bank Rate - voted to hold Bank Rate to ensure monetary policy remai BOE'S GREENE: DISINFLATION PROCESS MAY BE STALLING. BoE's Greene suggests slowing the pace of interest rate cuts is appropriate

BoE Gov. Bailey: I will go into the coming meetings asking whether a cut is justified BANK OF ENGLAND'S BAILEY: WE DO EXPECT INFLATION TO RETURN TO CLOSE TO TARGET IN APRIL Bailey: Report to the Treasury Committee In the 15 months since my last report to the Treasury Committee in November 2024, monetary policy has had to navigate an increase in headline inflation against the backdrop of continuing underlying disinflation. To ensure a sustainable return of inflation to the 2% target, monetary policy has been set to balance, on the one hand, upside risk to inflation from lingering persistence in domestic inflationary pressures stemming from the big inflationary shocks of recent years, and downside risks to inflation from subdued economic growth and a weakening labour market on the other. Gradual progress on underlying disinflation and receding risks from prolonged cost pressures have allowed the Monetary Policy Committee (MPC) to cut Bank Rate four times, from 4.75% in November 2024 to 3.75% today. Twelve-month inflation in the Consumer Price Index (CPI) was 3.4% in the latest data for December 2025, up from its most recent trough of 1.7% in September 2024 – the latest datapoint at the time of my previous report – but down from a peak of 3.8% in July, August and September 2025. Looking ahead, Bank staff expect CPI inflation to decline further to about 3% in January, February and March this year, before reaching a level close the 2% target from April. In the latest Monetary Policy Report (MPR) from February 2026, in the central case, inflation is then projected to stay close to the 2% target for the r BOE'S BAILEY SAYS EXPECT TO SEE SCOPE FOR SOME FURTHER EASING OF POLICY, PROBABLY DURING THIS YEAR ... BOE'S BAILEY: RATE CUT AT NEXT MEETING IS A GENUINELY OPEN QUESTION

Fed's Barkin: Clear Sense That Job Market Has Loosened - Hard To Calibrate What's Going On With Labor Supply - Inflation Data Has Been Consistently Above Target - Firms Say They Have Very Limited Pricing Power - Seeing Disinflation Across The Economy, But Wants More Confirmation… FED'S BARKIN: FIRMS SAY THEY HAVE VERY LIMITED PRICING POWER FED'S BARKIN: EXPECTS LATEST TARIFF MOVES WON'T CHANGE INFLATION DYNAMICS THAT MUCH FED'S BARKIN SAYS THE CORE FACTORS FAVOR THE CONSUMER SECTOR AND DRIVE DEMAND FED'S BARKIN SAYS A REDUCTION IN ARTIFICIAL INTELLIGENCE INVESTMENT COULD NEGATIVELY AFFECT THE ECONOMY ...