The UK interest rate currently sits at a 16-year-high of 5.25% after it had been increased by the Bank of England’s Monetary Policy Committee over the past two years in a bid to tackle inflation
UK interest rates could be cut by the Bank of England as early as this summer, hinted the bank’s deputy governor.
In a Monday morning speech, Ben Broadbent, deputy governor of the central bank, mentioned that a reduction in borrowing costs is “possible” this summer if economic conditions align with expectations. Currently, the UK interest rate is at a 16-year peak of 5.25%, following successive hikes by the Bank of England’s Monetary Policy Committee (MPC) over the last two years aimed at curbing inflation.
March saw the Consumer Prices Index (CPI) inflation fall to 3.2% year-on-year, and it’s expected to edge closer to the 2% target in the upcoming months. Broadbent emphasized that the MPC, consisting of nine members who vote on interest rate adjustments, needs to closely monitor ongoing trends in wage and service sector inflation.
He said: “Whatever the priors of its individual members the MPC will continue to learn from the incoming data and, 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 the bank rate could be cut some time over the summer.”
Clare Lombardelli, currently the chief economist for the Organisation for Economic Co-operation and Development (OECD), is set to succeed Mr Broadbent on July 1. Mr Broadbent’s final vote on interest rates will occur in June, with another decision scheduled for August.
Earlier this month, Mr Broadbent was among those who voted for interest rates to stay at 5.25%, with a 7-2 vote in favour of no change. The financial markets are anticipating a reduction in interest rates by August.
