Governor Andrew Bailey said it was “good news” that inflation fell back to its 2% target for the first time in almost three years but that officials wanted to be sure that pressure on prices is subdued before acting. With price pressures cooling and unemployment rising, there is more speculation that the bank can step back from a rates policy designed to weigh down on demand.
The Bank of England revived speculation about an imminent cut in interest rates, hinting that more of its officials may be close to backing a pivot away from the highest borrowing costs in 16 years.
Investors priced in a more than 50% chance of a move in August, the first time in more than a month they’ve been so certain. The UK central bank left the key rate on hold at 5.25% on Thursday but said the decision not to ease was “finely balanced” for some of the nine members on the Monetary Policy Committee.
