BoE's Broadbent says interest rate cut 'possible' in summer

Bank of England deputy governor Ben Broadbent said on Monday that it was "possible" that interest rates could be cut this summer.

"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 Bank Rate could be cut sometime over the summer,” said Broadbent, noting that policymakers were now battling with "persistent, second-round effects" of the initial surge in inflation.

The BoE believes that the easing of the current inflationary environment was likely to be "asymmetric", taking longer to unwind than it did to appear, with strong wage growth seen as one of the main reasons why.

UK businesses have also indicated that they feel less able to pass on higher costs to consumers than they did in 2023, limiting inflationary impacts from higher wages. Real incomes have also recovered so far in 2024, which was also seen as potentially meaning that Britons do not feel the need to demand higher wages going forward.

"The more that's regained, the less ground, relative to some notional 'norm', there is to make up," said Broadbent, who was speaking ahead of April's inflation figures on Wednesday.

Reporting by Iain Gilbert at Sharecast.com