In two weeks, the Bank’s Monetary Policy Committee will vote on whether to raise the base rate, which is now at 5.25%.
Economists are divided on whether another hike is likely.
And Mr Bailey said he couldn’t predict how the MPC would vote right now. However, he told MPs that it was no longer “clear” that interest rates needed to rise further.
“There was a period when it seemed clear to me that rates needed to rise going forward,” he told the Treasury Select Committee. And the question for us was how much and how quickly.
“But we’re not I think in that place any more. And that’s why we shifted our language to being much more evidence and data-driven.
“I think we are much nearer now to the top of the cycle.
“I am not therefore saying we are at the top of the cycle because we still have a meeting to come. But I think we are much nearer to it, on interest rates, based on the current evidence.”
Inflation – the rate at which prices rise – fell to 6.8% in July, down from 7.9% in June. Prime Minister Rishi Sunak has said halving inflation from January’s 10.7% is his “number one priority”.
Mr Bailey said: “We’re currently around 0.1 percentage points from where we were expecting to be in the May forecast. So…our short-term forecast is performing better.” He added there were signals “the fall in inflation will continue” and will be “quite marked” by the end of 2023.