March interest rate cut is ‘genuinely open question’, says Andrew Bailey
The governor of the Bank of England said on Tuesday he will need to be confident he has seen ‘enough further evidence’ before backing another cut.
The prospect of an interest rate cut next month is a “genuinely open question”, the governor of the Bank of England has said.
Andrew Bailey told MPs on Tuesday he will need to be confident he has seen “enough further evidence” before backing a further cut.
The central bank’s nine-strong Monetary Policy Committee (MPC) will vote on whether to maintain UK interest rates at 3.75% on March 19 or potentially reduce them.
In their previous meeting earlier this month, the MPC voted by five-to-four in favour of keeping the rate at 3.75% despite a recent slowdown in inflation.
Mr Bailey, who has been the Bank’s governor since 2020, voted to maintain the base rate at the latest meeting and has been a decisive voter on numerous occasions over the past year.
When asked about the potential to vote in favour an interest rate cut in March, he said: “The question for me is whether I have I seen enough further evidence to feel that I’m confident to take that step.
“It’s a genuinely open question at the moment.”
The Bank governor also told MPs at Parliament’s treasury select committee meeting that inflation is expected to drop to the 2% target in the spring.
Consumer Prices Index (CPI) inflation was reported at 3% in January, dropping from 3.4% a month earlier.
Mr Bailey said: “We expect inflation to be there or thereabouts 2% in the spring and it is pretty much baked in given the things we know are coming through.”
Energy bill support announced in last November’s autumn budget is set to contribute to the expected drop in inflation.
However, Huw Pill, chief economist at the Bank, said the “disinflation process towards the 2% target is incomplete”.
