Bank of England Governor Andrew Bailey indicated on Tuesday that an interest rate cut in March remains a possibility. However, he noted that services price inflation, a key indicator closely monitored by the central bank, has not decreased as much as anticipated in recent data. Bailey told legislators that additional evidence would be necessary to instill confidence in cutting borrowing costs at the bank’s upcoming policy announcement on March 19. This follows a recent Monetary Policy Committee vote where he joined a 5-4 majority in favour of holding interest rates steady this month.
“Well, we’ll see. I think at the moment I would say we’re still a little way off (from) the next meeting … It is a genuinely open question at the moment,” Bailey stated before Parliament’s Treasury Committee, emphasising the uncertainty surrounding the decision. Markets are keenly awaiting further signals from the BoE regarding the future direction of monetary policy.
Bailey reiterated the Bank of England’s projection that headline inflation is likely to decline significantly, approaching the central bank’s 2 per cent target in the April data, scheduled for release in May. Recent figures show consumer price inflation cooling to 3 per cent in January. While slightly above the Bank of England’s forecast published earlier this month, the data signals a continued moderation in inflationary pressures.
