Interest rates could fall more quickly, hints Bank

Interest rates could fall more quickly, hints Bank

The Bank of England could cut interest rates more quickly if price rises remain under control, its governor has suggested.
Andrew Bailey told the Guardian, external that the Bank could be a “bit more aggressive” at cutting borrowing costs, depending on the rate of inflation.
The Bank cut interest rates from 5.25% to 5% in August, which was the first drop in more than four years.
Mr Bailey also said that the Bank was watching developments in the Middle East “extremely closely”, in particular any movement in oil prices that could fuel inflation.
The Bank of England has two more more meetings left this year to decide on interest rates, in November and December.
At the Bank’s last gathering in September, Mr Bailey was optimistic that borrowing costs would continue to fall. But he said at the time it was “vital” inflation remained low.
The Bank raised interest rates steadily from the end of 2021 as inflation – the rate at which prices rise – surged, partly due to the increase in energy prices following Russia’s invasion of Ukraine.
However, now that inflation is currently close to the Bank’s 2% target, attention has focused on how many rate cuts will be made.
Falling interest rates will cut mortgage payments for households who have deals that track the Bank of England rate. However, the majority of mortgage customers have fixed-rate deals, so will not be affected immediately.
For savers, a cut in rates is likely to reduce the amount they earn on their money.
Many analysts expect the Bank to reduce rates at its meeting in November. However, following Mr Bailey’s interview with the Guardian, expectations increased of a rate cut in December as well.

Categories: Business News