Bank of England Governor Andrew Bailey announced that while the central bank may implement gradual cuts to interest rates, it must remain cautious to ensure inflation stays close to its 2% target. Current headline inflation stands at 1.7%, but core inflation, which excludes volatile food and energy prices, is at 3.2%. The International Monetary Fund has warned that persistent inflation may extend the period of higher interest rates in the UK and US. Bailey highlighted the need for a balanced approach, especially following the recent budgetary measures that could lead to increased prices.