Bank of England Governor Andrew Bailey has indicated that the UK labour market is showing signs of softening amid broader economic uncertainty. He emphasized that monetary policy remains restrictive but noted that interest rates are on a gradual downward path, with a potential rate cut expected in August, possibly by 25 basis points to 4%. Bailey highlighted that the Bank of England will continue a gradual and careful approach to withdrawing monetary policy restraint until the risks of inflation returning sustainably to the 2% target in the medium term have diminished. He also stressed that monetary policy is not on a pre-set path due to two-sided inflation risks. Additionally, Bailey pointed to elevated risks and uncertainties stemming from geopolitical tensions, global fragmentation, and pressures on sovereign debt markets. These uncertainties have led to caution in business investment, which is expected to have some impact on employment levels. While the labour market is weakening, Bailey noted it is too soon to observe the price effects from recently implemented tariffs.