English Central Bank Governor: Interest Rate Cut This Year "Not Irrational"

Strengthening Prospects for More Than Two Rate Cuts This Year

Andrew Bailey, Governor of the Bank of England (BOE), the central bank of the United Kingdom, responded positively to market expectations of an interest rate cut this year, major British newspapers reported on the 22nd (local time).

In an interview with these newspapers, Governor Bailey said that the overall situation this year where interest rates might be cut is "not unreasonable."

When asked whether the possibility of a rate cut remains alive in future Monetary Policy Committee meetings, he responded positively, saying, "All our meetings are in play."

Regarding the UK economy, he evaluated, "There are increasingly positive stories," and "Global shocks are decreasing, and (high inflation) is not that persistent."

Andrew Bailey, Governor of the Bank of England (BOE).
[Photo by Asia Economy DB]

Although Governor Bailey did not specify when or how many times rates might be cut this year, the newspapers interpreted his remarks as suggesting that the market's expectation of more than two cuts this year is correct.

Even after announcing at the previous Monetary Policy Committee meeting that the base rate would be maintained at 5.25% per annum, he hinted at the possibility of a cut by saying, "(The UK economy) is moving in the right direction."

The BOE, which has pursued an aggressive tightening policy by raising rates 14 consecutive times since December 2021 (0.10%), had held rates steady for five consecutive times until the previous day.

Unlike previous meetings, none of the nine Monetary Policy Committee members voted for a rate hike, and with Governor Bailey's remarks added, the market interpreted this as more dovish (favoring monetary easing) than before.

This content was produced with the assistance of AI translation services.