"The comments from BoE governor Andrew Bailey this morning seem to all but confirm a base rate cut in November."
- Editor-in-chief of TopMoneyCompare, Russell Gous
Bank of England governor, Andrew Bailey, has suggested that there will be further cuts to Bank Rate this year, stating that the Bank could be a “bit more aggressive” in cutting interest rates.
In an interview with the Guardian, Bailey cautioned that the Bank won't cut rates “too far or too fast” but noted that it would be a “bit more activist” if inflation continues to ease.
The Bank's Monetary Policy Committee (MPC) reduced interest rates in August from 5.25%, the first cut since March 2020.
However, it voted 8-1 to hold Bank Rate at 5% in its latest meeting last month.
UK inflation was unchanged at 2.2% in August, in line with market expectations but below the Bank of England's forecast of 2.4%, leaving industry experts divided on the future path of Bank Rate.
After hitting the Bank of England's 2.0% target in May and June, rising inflation - including core inflation which rose to 3.6% - has caused many economists to predict a hold in interest rates for longer, noting that the decision to cut in August was finely balanced at 5-4 in favour.
Many economists now predict that a further rate reduction will come at the Committee's meeting in November.
In its latest meeting, the MPC said a "gradual approach to removing policy restraint remains appropriate".
Editor-in-chief of TopMoneyCompare, Russell Gous, commented: "The comments from BoE governor Andrew Bailey this morning seem to all but confirm a base rate cut in November. Although this is positive news for millions of borrowers across the UK, it could signal turbulence for GBP in the coming weeks.
"His comments have already been felt in exchange markets as the pound saw a notable fall. This comes after previous comments had suggested caution on rate cuts was still warranted.
"This ramping up in dovish rhetoric appears to have already spooked markets, and further volatility could well be on the horizon."
