The Bank of England boss has said “we are on the way” to interest rate cuts after they were left unchanged at 5.25%, their highest for 16 years.
The Bank still needed to see inflation fall further, but last month’s drop to 3.4% was “very encouraging and good news,” governor Andrew Bailey said.
But he said rate cuts could come before inflation hits its 2% target.
But he said rate cuts could come before inflation hits its 2% target.
Mr Bailey sounded far more optimistic on rate cuts than the official statement accompanying the Bank’s decision to leave the cost of borrowing unchanged for the fifth time in a row.
Most economists had predicted interest rates would start to drop in the summer, especially after inflation fell to its lowest level in two and a half years in February.
“We don’t have to actually get inflation all the way back to target… to cut rates for instance, what we have to do is be convinced that it is going there. We should act ahead of time in that sense because we have to be forward looking,” Mr Bailey told the BBC’s economics editor Faisal Islam who was interviewing him on behalf of UK broadcasters.
Mr Bailey added: “We do need to see further progress, but I do want to give this message very strongly we have had very encouraging and good news, so I think you know we can say – we are on the way.”
He said it was “reasonable” that financial markets were pricing in two or three rate cuts this year, but warned he would not “endorse” that view. “That’s not a prediction from me as to what’s going to happen, either on timing or amount, but I am encouraged,” he added.
The Bank of England boss has said “we are on the way” to interest rate cuts after they were left unchanged at 5.25%, their highest for 16 years.
But he said rate cuts could come before inflation hits its 2% target.
The Bank still needed to see inflation fall further, but last month’s drop to 3.4% was “very encouraging and good news,” governor Andrew Bailey said.
Mr Bailey sounded far more optimistic on rate cuts than the official statement accompanying the Bank’s decision to leave the cost of borrowing unchanged for the fifth time in a row.
But he said rate cuts could come before inflation hits its 2% target.
But he said rate cuts could come before inflation hits its 2% target.
Mr Bailey sounded far more optimistic on rate cuts than the official statement accompanying the Bank’s decision to leave the cost of borrowing unchanged for the fifth time in a row.
Most economists had predicted interest rates would start to drop in the summer, especially after inflation fell to its lowest level in two and a half years in February.
“We don’t have to actually get inflation all the way back to target… to cut rates for instance, what we have to do is be convinced that it is going there. We should act ahead of time in that sense because we have to be forward looking,” Mr Bailey told the BBC’s economics editor Faisal Islam who was interviewing him on behalf of UK broadcasters.
Mr Bailey added: “We do need to see further progress, but I do want to give this message very strongly we have had very encouraging and good news, so I think you know we can say – we are on the way.”
He said it was “reasonable” that financial markets were pricing in two or three rate cuts this year, but warned he would not “endorse” that view. “That’s not a prediction from me as to what’s going to happen, either on timing or amount, but I am encouraged,” he added.
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