The Bank of England’s Governor, Andrew Bailey, has cautioned that there will be no reduction in interest rates in the near term, emphasizing that the upcoming phase of reducing inflation will be challenging.
Bailey stated that discussions about lowering interest rates are premature, despite his observation that the economy’s growth rate is currently lower than it has been for much of his career.
He suggested that interest rates will remain at their 15-year peak of 5.25pc for an extended period, even though the Office for Budget Responsibility (OBR) has revised its growth forecasts for the UK economy downwards for the next three years.
Despite market expectations for the Bank of England to start reducing interest rates by August at the latest, Bailey, in an interview with the Newcastle Chronicle, stressed the importance of reducing inflation to 2pc. He expressed awareness of the challenges faced by those less financially secure but reiterated his stance against any near-term discussions of interest rate cuts.
He also noted that bringing down inflation from 4pc at the end of the next quarter to 2pc would be a demanding task.
