Interest rates held at 5% but 'on path down', says Bank chief

The governor of the Bank of England has signalled readiness to resume interest rate cuts despite keeping borrowing costs unchanged yesterday at 5%, amid concerns over lingering high inflation.

- Richard Partington

Andrew Bailey said the central bank was "now gradually on the path down" from among the highest borrowing costs since before the 2008 financial crisis. "I think interest rates are going to come down, I'm optimistic on that front," he said.

Earlier yesterday the Bank's monetary policy committee (MPC) votedeight to one against launching a back-to-back reduction in interest rates, pausing its efforts to ease the pressure on household budgets.

The Bank last month cut interest rates for the first time since the Covid pandemic was declared four years ago, after a sharp fall in inflation from a peak of 11% in late 2022.

Bailey said that while inflationary pressures had continued to ease, he wanted to caution against expectations for a rapid easing of monetary policy. "We need to be careful not to cut too fast or by too much," he said.