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Interest rates could be cut this summer, Bank of England deputy governor says


A hint at possible interest rate cuts by the Bank of England as early as this summer has been made by its deputy governor, Ben Broadbent. According to a speech given by Broadbent on Monday morning, decreasing borrowing costs is “possible” this summer if economic conditions fall in line with expectations.

As it stands now, UK interest rates are at a 16-year high of 5.25 percent, a consequence of consecutive increases by the Monetary Policy Committee (MPC) of the Bank of England over the last two years, aimed at controlling inflation.

Inflation, measured using the Consumer Prices Index (CPI), experienced a dip in March, landing at an annual 3.2 percent. It’s anticipated that this figure will continue to approach the target rate of two percent over the next few months.

The MPC, a group of nine that vote on any rate alterations, must keep its eye on service sector inflation and wage trends moving forward, stressed Broadbent.

His remarks included the following: “Whatever the priors of its individual members the MPC will continue to learn from the incoming data and, if things continue to evolve with its forecasts forecasts that suggest policy will have to become less restrictive at some point then it’s possible the bank rate could be cut some time over the summer,” reports the Mirror.

Succeeding Broadbent in his role come July 1 will be Clare Lombardelli, currently holding the position of chief economist for the Organisation for Economic Co-operation and Development (OECD). Broadbent’s last vote on interest rates will take place in June, with a follow-up decision slated for August.

Earlier this month, Mr Broadbent was among the majority who voted for interest rates to remain at 5.25 percent, with a 7-2 vote in favour of no change. The financial markets are predicting a decrease in interest rates by August.

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