(fxcue news) - Inflationary pressures in the U.K. are easing, but it is too early to declare a victory, Bank of England Governor Andrew Bailey said Friday. "Recent experience leads me to be cautiously optimistic that inflation expectations are better anchored as a result of the regimes we have in place," Bailey said in his speech at the Federal Reserve's Jackson Hole Symposium in Wyoming. "The second round inflation effects appear to be smaller than we expected." "But it is too early to declare victory. Policy does have to react - the regime works because we use it," Bailey said. Earlier in August, the U.K. central bank lowered its benchmark rate for the first time since the onset of the coronavirus pandemic as inflation receded and the underlying growth momentum remained weaker. The Monetary Policy Committee cut the bank rate by a quarter-point to 5.00 percent from 5.25 percent, which was the highest since early 2008. The first reduction in UK interest rates since March 2020 was decided in a 5-4 vote. The central bank is widely expected to lower rates further this year. The BoE chief also sought caution regarding the weaker than expected level of inflation persistence as price growth is not yet back to the 2 percent target. "Policy setting will need to remain restrictive for sufficiently long until the risks to inflation remaining sustainably around the 2 percent target in the medium term have dissipated further," Bailey said. "The course will therefore be a steady one." Bailey's comments came after U.S. Federal Reserve Chair Jerome Powell gave a clear signal that the fed funds rate would be cut in the near term, and expressed confidence that inflation is on a sustainable path back to 2 percent target. The Fed is widely expected to cut rates in September. The European Central Bank is also widely expected to cut rates in September after a pause in July. The bank reduced rates by 25 bps in June, which was the first reduction since 2019.