The Bank of England could move more quickly to cut interest rates if there is more good news on inflation, but conflict in the Middle East could push up oil prices, Governor Andrew Bailey told the Guardian newspaper.
There was a possibility that the Bank of England could become “a little more activist” in its approach to cutting interest rates, he added.
The Bank of England’s benchmark bank rate now sits at 5 per cent after the first reduction in borrowing costs in August in four years. The British central bank left rates unchanged last month, but investors expect another quarter-point cut at its November meeting.
The Guardian quoted Bailey as saying he was encouraged that inflationary pressures had proven less persistent than the Bank had feared, although developments in the Middle East posed a risk.
“The geopolitical concerns are very serious,” Bailey told the newspaper. “It’s tragic what’s happening. Obviously there are tensions and the real issue then is how they could interact with some markets that are still quite tense in some places.”
There appeared to be “a strong commitment to keeping the (oil) market stable,” he added, but warned: “There is a point beyond which that control could be broken if things get really bad. You have to continually monitor this, because it could go wrong.”
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