Tag: Andrew Bailey

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Bank of England cuts rate to 5.0% – the first since the Covid pandemic of March 2020 and from the highest rate for 16 years

Bank of England

The Bank of England (BoE) on Thursday 1st August 2024 announced its first-interest rate reduction in more than four years, taking the key rate to 5%.

Although numerous analysts predicted that the Bank of England might announce a reduction in interest rates at its August 2024 meeting, the absence of definitive signals from the central bank left the decision clouded in uncertainty.

The Monetary Policy Committee (MPC) ultimately cast a 5-4 vote in favour of the reduction, with Governor Andrew Bailey stating that the committee would proceed with caution.

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Bank of England governor worried over UK growth outlook

Central Banks are struggling to catch-up with inflation

The governor of the Bank of England, Andrew Bailey has raised concerns over economic growth as he warned again that interest rates will not be cut in the ‘foreseeable future’.

The bank boss said he was concerned over the UK economy’s potential to grow. It comes after the government’s forecaster cut its growth outlook for the UK, due to high inflation, interest rates, energy and food price increases which were exacerbated by the Covid pandemic and Russia’s invasion of Ukraine.

Inflation, which is the rate consumer prices rise at, has dropped sharply in recent months, falling to 4.6% in the year to October largely as a result of lower energy prices.

However, it is still more than double the Bank of England’s 2% target and Mr Bailey warned lowering inflation further would be ‘hard work’.

Interest rates are currently at 5.25%, a 15-year high, which has pushed up borrowing and mortgage costs.

The Bank of England (BoE) failed abysmally to maintain inflation at 2%.