Yahoo Finance Interest rates: UK made inflation progress but there's more to do, says Bank of England chief
There are clear signs progress is being made on the UK's high inflation but there is still much more to do and interest rate decisions are going to be tight, Bank of England governor Andrew Bailey has said.
The Bank's monetary policy committee will meet on 2 November to decide on interest rates. It left the rates unchanged at 5.25% in it's last meeting on 21 September after 14 consecutive rises.
“The last mile really does lean heavily on... restrictive policy,” Bailey said, according to a report by Reuters, adding that the slow growth rate of the country would continue to weigh on decisions made on Threadneedle Street.
The economic outlook still appears “very subdued," he added, while speaking at an event organised by the Institute of International Finance, during the International Monetary Fund (IMF)/World Bank’s gathering in Marrakesh, Morocco.
And now Bailey - he says decisions will go on being tight https://t.co/8OJjKwH7aT
— Andy Bruce (@BruceReuters) October 13, 2023
Inflation fell to an 18-month low of 6.7% in August, giving the Bank impetus to pause interest rate rises at the last MPC meeting — at least for now.
Bailey echoed recent comments from other Bank officials who stressed they are keeping their options open for future rate decisions after the monetary policy committee voted 5-4 to halt its run of back-to-back rate hikes in September.
A Reuters poll of economists late last month suggested majority believing interest rates will be left unchanged in Bank's November meeting.
Earlier, the Bank's chief economist, Huw Pill, said it was premature to talk about cutting interest rates.
"We have done a lot over the last two years. A lot of that policy is still to come through. Whether we've done enough – or whether we have more to do – I think is becoming a more finely balanced issue. But we will do what we need to do in order to have inflation at 2% on a lasting basis," Pill told a panel discussion on the sidelines of IMF meetings in Morocco.
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Meanwhile in the US, the Federal Reserve chair Jerome Powell has also said rates will remain "higher for longer," meaning that even after the central bank ends its current rate-hiking cycle and begins the process of bringing rates down, interest rates will remain higher than what the Fed thinks would be needed to sustain economic growth with inflation at 2%.
What, exactly, "longer" entails is at the heart of investor debates about the Fed's policy future. But last month, the central bank offered further outlines of its answer — at least three more years.
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