The Bank of England hints its rate-cutting campaign may be coming to an end
PANews reported on August 7 that according to Jinshi, the Bank of England reiterated its guidance of "taking a gradual and cautious approach" to further cutting borrowing costs, but added a new clue in its message on the outlook, suggesting that its interest rate cutting campaign may be coming to an end. The Bank of England said that "with the reduction in interest rates, the restrictiveness of monetary policy has decreased," and no longer directly stated that the policy is still restrictive. The Bank of England reiterated that there is no pre-set path for interest rates. Halting the interest rate cut process would be a blow to Chancellor of the Exchequer Reeves and Prime Minister Starmer, who have been working hard to fulfill their promises to voters to speed up the UK's slow economic growth. Bailey said that the decision to cut interest rates for the fifth time since August last year was "very balanced", although he believed that interest rates were still on a downward path.
Four of the nine policymakers reportedly sought to keep borrowing costs unchanged due to concerns about high inflation. Due to the difficulty in reaching a consensus, the Monetary Policy Committee (MPC) was forced to hold two interest rate votes for the first time in its history. The MPC was divided over how to address inflation (which the Bank of England predicts will soon double its 2% target) and the recent worsening unemployment situation. Governor Bailey and four of his colleagues supported lowering the bank's interest rate from 4.25% to 4%. The four members who voted to keep rates unchanged included Deputy Governor Lombardelli, who broke with the majority for the first time, and Chief Economist Peel, who also voted to keep rates at 4.25%.
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