London (Reuters) – British central bank chief Andrew Bailey has given new fuel to speculation about a turnaround in interest rates this year.
It would be “not unreasonable” for financial markets to expect monetary policy easing, he told the House of Commons finance committee on Tuesday. But he did not want to make a prediction as to when and how much the key interest rate could be reduced. At the same time, the head of the central bank sees reason for optimism despite the 0.3 percent decline in economic output in the fourth quarter of 2023: “We believe that the economy is already showing clear signs of an upswing,” emphasized the head of the Bank of England (BoE).
BoE Deputy Governor Ben Broadbent also said it was possible that the central bank would cut interest rates this year. However, this depends on how the economy develops.
The central bank is aiming for a sustained decline in inflation towards its target of two percent and has already made progress: the annual inflation rate averaged 4.0 percent in January, as in December. At the end of 2022, at 11.1 percent, it was still higher than it had been in more than 40 years.
The BoE has resisted rising prices and raised the key interest rate to 5.25 percent. She has been quiet since September. The next interest rate decision is due on March 21st.
(Report by David Milliken and Suban Abdulla, written by Reinhard Becker, edited by Christian Götz. If you have any questions, please contact our editorial team at [email protected] (for politics and economics) or [email protected] (for companies and markets).)