jollibet Bank of England Holds Rates Steady but Signals Gradual Easing
The Bank of England held off on cutting rates on Thursday, but signaled that it was still on the path to lower them.
Unlike the Federal Reserve’s outsize cut to rates on Wednesday, the British central bank has emphasized its intention to move slowly. The majority of policymakers voted to hold rates at 5 percent, though one member of the nine-person committee wanted to cut rates a quarter-point. Last month, the bank cut rates a quarter point, the first decline in more than four years, bringing rates down from their 16-year high.
If the inflation continues to slow and the economy evolves as policymakers expect, “we should be able to reduce rates gradually over time,” Andrew Bailey, the governor of the cental bank, said in a statement on Thursday.
“But it’s vital that inflation stays low, so we need to be careful not to cut too fast or by too much,” he added, reiterating comments he had previously made.
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SKIP ADVERTISEMENTInflation in Britain has slowed substantially in the past two years as a jump in energy prices has faded, supply chains have become unclogged and high interest rates have weighed on the economy, but policymakers are nevertheless approaching rate cuts with caution. There are some components of inflation, such as price increases in the services sector and wage growth, that are uncomfortably high for officials.
The inflation rate in Britain stayed at 2.2 percent in the year through August, defying expectations that it would be pushed higher by energy prices. Instead, lower prices at restaurants and hotels offset a jump in airfares. But services inflation accelerated to 5.6 percent last month, from 5.2 percent in July.
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