In an interview with Newcastle upon Tyne’s Chronicle Live, Mr Bailey said: “If you look at what I call the potential growth rates of the economy, there’s no doubt it’s lower than it has been in much of my working life.
“It does concern me that the supply side of the economy has slowed. It does concern me a lot.”
And, after inflation dipped below 5 per cent for the first time since Russia’s invasion of Ukraine, Mr Bailey said continuing to cut the rate of price increases would be “hard work”.
Between September and October, the rate fell from 6.7 per cent to 4.6 per cent, but Mr Bailey said that as falls in global energy prices become less sharp “we are not going to see another month, I’m afraid, where it’s going down 2 per cent”.
As a result, he said the Bank’s monetary policy committee (MPC) will not be cutting interest rates “in the foreseeable future”, adding “it’s too soon to have that discussion”.
Financial markets currently expect interest rates, which affect the cost of borrowing products such as mortgages, to remain at 5.25 per cent until next summer.
The Office for Budget Responsibility last week slashed its predictions for the UK’s economic growth over the next two years, warning that inflation may not come down to the Bank’s 2 per cent target until 2025.
Growth next year is expected to be just 0.7 per cent in 2024, compared with a March forecast that it would hit 1.8 per cent. In 2025 it will be just 1.4 per cent, compared with an earlier expectation of 2.5 per cent.
But on Monday, the prime minister struck a more bullish tone, telling guests at a Global Investment Summit there was “positive momentum” in the economy.
A week after chancellor Jeremy Hunt used his autumn statement to offer personal and business tax cuts, Mr Sunak told business leaders the UK is “the best country in the world to invest”.
He cited Britain’s “unique combination” of a competitive tax system, a culture of innovation and “our people”.
Scores of chief executives including Stephen Schwarzman from Blackstone, Amanda Blanc at Aviva, David Soloman from Goldman Sachs and Jamie Dimon at JP Morgan Chase were attending the gathering, aimed at attracting financial support for UK projects.
Before the summit, the Government said a total of £29.5 billion had been committed by investors, triple the sum raised at the last global investment gathering in 2021.