Governor positive

Bank’s Bailey says interest rate cuts ‘in play’

Andrew Bailey
Andrew Bailey: a positive story to tell

Bank of England governor Andrew Bailey says he is confident inflation is heading towards target and that Interest rate cuts are now “in play” for this year.

Mr Bailey said in an interview that the risk of wage-price spiral has diminished and suggested the markets were right to expect more than one interest rate cut this year.

He told the Financial Times: “We have an increasingly positive story to tell.

“The global shocks are unwinding and we are not seeing a lot of sticky persistence (in inflation) coming through at the moment.”

He delivered a confident message that interest rate cuts are now on the agenda for future meetings of the Bank’s Monetary Police Committee.

With indications that inflation is under control on both sides of the Atlantic, the Bank held interest rates on Thursday for the fifth successive meeting of the committee.

Significantly, two of the nine MPC members – Catherine Mann and Jonathan Haskel – switched their positions from more rate hikes to keeping rates on hold.

Markets responded positively and the FTSE 100 index hit a high of 7,960 during Friday’s session. it is likely to push back above 8,000 in the coming days and weeks barring any change of sentiment.

Kathleen Brooks, research director at trading platform XTB, said: “The market rally this week was driven by news that central banks have shifted to a more dovish stance.

“The dovish shift in the Bank vote split is seen as a major step towards cutting rates later this year. The market now thinks that the first rate cut will come in June, and that there will be three rate cuts this year.”

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