BoE Governor Urges Caution on Rate Cuts Amid Inflation Risks

Bank of England Governor Warns Against Rushing Interest Rate Cuts Amid Ongoing Inflationary Pressures

Andrew Bailey, Governor of the Bank of England, emphasized that any reduction in interest rates should be done gradually and cautiously,
noting that current economic conditions still necessitate maintaining a restrictive monetary policy for a longer period to ensure inflation sustainably returns to the 2% target.

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Bailey explained that accelerating the pace of rate cuts could reignite inflationary pressures,
threatening medium-term price stability.
He stressed that monetary policy does not follow a predetermined path but instead depends on developments in economic data,
particularly those related to inflation and the labor market.

He noted that the current path for interest rates is trending downward gradually,
provided there are no signs pointing toward the need to return to tighter policy.
He highlighted concerns about the economic outlook amid growing signs of weakness and a decline in labor market dynamics.

Bailey also added that the persistence of high inflation in the short term complicates the Bank’s task in determining the timing of the next step,
making it essential to act with caution and without adhering to a fixed schedule.

He concluded by reaffirming that the Bank’s current priority remains price stability,
managing monetary policy with full flexibility, and avoiding excessive expectations for a rapid or significant rate cut.
He emphasized the importance of markets remaining realistic and disciplined in their expectations.

BoE Governor Urges Caution on Rate Cuts Amid Inflation Risks

BoE Governor Urges Caution on Rate Cuts Amid Inflation Risks

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