Bank of England Governor Andrew Bailey said on Thursday he was "optimistic" that inflation pressures would ease sufficiently for the central bank to cut rates further, but declined to be drawn on timing.

"I think we're now on a gradual path down. That's the good news. I think interest rates are going to come down. I'm optimistic on that front, but we do need to see some more evidence," he told broadcasters.

Bailey added that he had no concerns about how the government might change the treatment of losses from the BoE's bond sale programme in its budget rules, adding that this did not affect the BoE's decisions on its pace.

Earlier on Thursday the BoE kept its main interest rate unchanged at 5% after voting 5-4 for a cut in August, and said it would reduce its government bond holdings by a further 100 billion pounds over the next 12 months.

(Reporting by David Milliken and Suban Abdulla, Editing by Kylie MacLellan)