Expectations for a rate cut this year 'not unreasonable' - Bailey
Expectations of interest rate cuts this year are "not unreasonable", the governor of the Bank of England has said.
On Thursday the BoE kept the cost of borrowing unchanged at a 16-year high of 5.25%, as widely expected.
But speaking to the Financial Times, Andrew Bailey struck an upbeat tone, telling the newspaper he was encouraged by the direction of inflation.
He said rate cuts were "in play" at future meetings of the rate-setting Monetary Policy Committee, after tighter monetary policy had quashed earlier fears of a wage-price spiral.
"It’s like the Sherlock Holmes dog that doesn’t bark," he said. "If the second-round effects don’t come through, that’s good because monetary policy has done its job.
"We have an increasingly positive story to tell on that. The global shocks are unwinding and we are not seeing a lot of sticky persistence [in inflation] coming through at the moment. That is the judgment we have to keep coming back to."
While he declined to say when the MPC might cut rates, nor by how much, he conceded: "The fact that we have a curve that has cuts in it for the year as whole is not unreasonable to me.
"All our meetings are in play. We take a fresh decision every time."
Having surged to record highs, inflation has eased significantly in recent months. The latest data showed a decline to 3.4% from 4% in February, but it remains above the BoE’s long-term target of 2%.
Central banks are also largely taking a cautious approach to reducing rates, with the European Central Bank and US Federal Reserve also yet to cut.
A decision by the Swiss National Bank on Thursday to trim rates by 25 basis points to 1.5% surprised markets, and sent the Swiss franc lower against both the euro and US dollar.
The MPC hiked the cost of borrowing 14 times from December 2021. But with inflation easing, it has now voted to leave rates unchanged since August.