Andrew Bailey, Governor of England, in the headquarters of the Central Bank in the city of London, Great Britain, 29. November 2024.
Hollie Adams | Bloomberg | Getti images
Governor Bank of England Andrew Bailey said CNBC Tuesday that the “path of interest rates will continue to be gradually down”, as the central bank of jonity to tamed inflation and abolish elusive economic growth.
“I haven’t changed my mind,” he told CNBC Annette Weisbach to Sintra, Portugal, where the European Central Bank holds forum. “But in the sense of where we will go to the next meeting? Well, we’ll see.”
Economists expect policy makers to reduce the rates for 25 bases in their next gathering in August, which would take the basic rate of the Central Bank with 4.25% to 4%.
But Boe Bailey told CNBC that policy makers should estimate whether permanent inflationary pressures, such as average salary inflation and higher energy prices continue to easily.
“For me, it is a key question, is this softening to start through and creates context where inflation will return to the goal?” He warned.
Boe has 2% of the inflation goal, but the rise of the price was stubbornly exceeding that level, Landing at 3.4% in May – Well above the adjacent Euro zone Latest printing of 2% in June. In the meantime, growth remains elusive, With an economy in the UK decreases abruptly in April As global trade tariffs and new domestic tax taxes were inserted.
Minister of Finance UK Rachel Reeves – Who is the last fall Intended to increase taxes On companies to largely fund the mammoth public spending program – said the latest growth data is “clearly disappointing”.
She also responded to the inflation of insisting that the treasury has taken “necessary choices to stabilize public finances,” referring to “fiscal rules” that dictates to be borrowed on a daily basis.
In time since these “non-negotiating” rules were set up last October, however, economic and fiscal prospects in the UK became more challenging, with higher interest rates and impaired taxes expected of expected cableifying with lower economic growth forecasts. Back in MarchThe independent budget responsibility office announced that he expects Great Britain to grow 1% this year and 1.9% in 2026. years.
Cups and tourists pass in front of boutiques and ancient shops on Portobello in London, United Kingdom.
Mark Kerrison | Pictures Getti images
The Reeves Chancellor admitted that “there is more to” how the government desperately seeks to strengthen growth in the Great Britain’s economy.
In order to achieve this, while its fiscal rules are held, Reeves was basically with three options: reduce public spending, increase lending or increase taxes.
Economists say that the last election of the government is the only real option, because it is already dedicated to greater public spending and a more sustainable borrowing framework.
Gratters of central bank policies tend to be checked to comment on fiscal policy governments to avoid charges of interference or bias. However, Bailey said CNBC on Tuesday that, while it was important that Reeves “set a very clear fiscal framework”, there should be a “suitable amount of flexibility in that”.
“The United Kingdom received a fiscal framework that the chancellor and I often discuss it. I know that the chancellor is very committed to robust fiscal policy, and it is important as a background of macroeconomic stability,” he said.
