Summer interest rate cut ‘possible’ as inflation eases, Bank of England boss says

The Bank of England could cut interest rates during the summer months, according to its deputy governor said a cut in the cost of borrowing is “possible” if the economy develops as expected. “If things continue to evolve with its forecasts – forecasts that suggest policy will have to become less restrictive at some point – then it’s possible Bank Rate could be cut some time over the summer,” he said.

Consumer Price inflation was at 3.2 per cent in March, compared with the previous year, and is predicted to drop towards the 2 per cent when April figures are released on Wednesday.The economist said the Bank’s nine-strong Monetary Policy Committee, which sets the interest rate level, would guage how persistent wage and services inflation are continuing to develop.

The direct effect on inflation as a result of the pandemic and Russia’s invasion of Ukraine have now faded he said and what is crucial now is how long the effects of that earlier surge on domestic inflation linger. “What we’re now left with are the more persistent, second-round effects of that earlier surge on domestic inflation. How long these persist is unclear,” he said.

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