Interest rates unlikely to go to near-zero again, Bank governor says

The governor of the Bank of England, Andrew Bailey, has said he expects interest rates to fall gradually but warned consumers not to expect a return to near-zero levels.

- Phillip Inman, Graeme Wearden

Bailey said he was "very encouraged" by the downwards path of inflation and "therefore I do think the path for interest rates will be downwards, gradually". Last week, the Bank kept rates on hold at 5%.

Bailey told the Kent Messenger he did not expect the cost of borrowing to return to the historic lows close to zero last seen four years ago, and his "best guess" was that it would settle "at a neutral rate".

The neutral rate of interest is the level at which monetary policy is set for stable prices and is neither stimulating nor restricting economic growth.