BoE’s Bailey Indicates Bank May Take a ‘More Activist’ Approach to Rate Cuts, According to Reuters

LONDON (Reuters) – The Bank of England may expedite interest rate cuts if positive developments in inflation continue, but escalating conflict in the Middle East could lead to higher oil prices, Governor Andrew Bailey stated in a recent interview.

Bailey suggested there is a possibility that the Bank could adopt a more proactive approach to interest rate reductions. Currently, the Bank’s benchmark interest rate stands at 5% following its first reduction in borrowing costs in four years this past August. Though rates were maintained last month, investors are anticipating another quarter-point cut at the upcoming November meeting.

Bailey expressed optimism that inflationary pressures have been less persistent than the Bank had anticipated; however, he acknowledged the risks posed by ongoing events in the Middle East. “Geopolitical concerns are very serious,” he remarked, describing the situation as tragic and highlighting the potential impacts on already strained markets.

He indicated that there seems to be a strong commitment to maintaining stability in the oil market, yet cautioned that control could falter if conditions deteriorate significantly. “Continuous monitoring is essential,” he noted, emphasizing the potential for things to take a negative turn.