Bank of England Governor Andrew Bailey said the UK economy is not sliding toward recession, despite subdued growth and a weakening labor market. The BoE forecasts GDP growth of 1.1% in 2026 and 1.2% in 2027, while inflation is expected to peak at 3.3%, above its 2% target. Bailey said inflation risks are tilted to the upside and that keeping the policy rate at a moderately restrictive level provides insurance against external shocks. The Bank Rate remains at 3.75% after a 6-3 Monetary Policy Committee vote. Bailey said market interest-rate expectations included a risk premium tied to concerns about further energy-price increases, with the central bank’s analysis indicating that investors were pricing additional tightening beyond the policy outlook alone. He rejected the idea of a predetermined rate path or a private plan to move unconditionally in one direction. Bailey also warned that prolonged elevated oil prices could produce second-round effects by spilling into wages and broader prices. Other risks include weak productivity, an aging population, tariff-related trade shocks and a potential correction in artificial-intelligence valuations that could reduce GDP by up to 2.2%.