BoE Chief Signals Uncertainty Over March Rate Cut Amid Price Inflation Concerns

Governor Andrew Bailey of the Bank of England flagged a potential interest rate cut in March, pending further data on inflation. Despite consumer inflation cooling, services price inflation remains a concern. This hampers confidence in lowering rates, amidst complexities like global trade dynamics affecting import prices.

The Bank of England's Governor, Andrew Bailey, hinted at a possible interest rate cut in March, though highlighted challenges due to persistent services price inflation. Speaking before lawmakers, Bailey emphasized that he requires more substantial evidence to solidify any decision to adjust rates.

During his testimony to the Treasury Committee, Bailey conveyed caution, noting projections that headline inflation could sharply align with the BoE's 2% target by April. Official data showed consumer price inflation eased to 3.0% in January, still aligning closely with forecasts, whereas services prices remained above anticipations.

Additionally, Bailey mentioned the impact of global trade tensions, particularly citing weaker goods price inflation likely due to increased Chinese imports to Europe amidst a U.S. trade conflict. Meanwhile, BoE's Huw Pill expressed concerns over underlying inflation pressures, advocating for a more cautious approach to rate decisions reliant on deeper analysis beyond headline figures.

(With inputs from agencies.)