Bank of England Slashes Interest Rates Amid Inflation Debate

The Bank of England reduced interest rates from a 16-year peak, following a closely contested vote among policymakers about whether inflationary pressures had sufficiently decreased. Governor Andrew Bailey discussed the impact of public sector pay, the uncertainty of future rate changes, and persistent inflation concerns during a press conference.

The Bank of England has slashed interest rates from a 16-year high, following a narrow vote by policymakers divided on whether inflationary pressures had sufficiently eased. During a news conference, Governor Andrew Bailey addressed various issues impacting the economy.

Bailey commented on public sector pay rises, noting that they influence demand and signalling effects. He mentioned that private sector wages typically lead those in the public sector. Bailey added that a clearer picture would emerge with the forthcoming budget.

On the matter of future rate adjustments, Bailey refrained from giving specifics, emphasizing their meeting-to-meeting approach. He also discussed the lingering persistence of inflation and whether it was due to unwinding global shocks or a structural change in wage and price setting.

(With inputs from agencies.)