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Bank of England policymakers speak after rate cut, weaker growth forecast
Published by Global Banking and Finance Review
Posted on February 6, 2025
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Published by Global Banking and Finance Review
Posted on February 6, 2025
LONDON (Reuters) -The Bank of England cut interest rates on Thursday as it halved its growth outlook for this year and said a jump in inflation will prove temporary.
Here's what Bank of England officials said in a press conference following that decision:
BANK OF ENGLAND GOVERNOR ANDREW BAILEY
On Inflation and future rate moves:
"We expect to be able to cut bank rate further as the disinflation process continues, but we will have to judge meeting by meeting, how far and how fast."
"The judgment we will have to make at our future meetings is whether underlying inflationary pressures in the UK economy are easing enough to allow further cuts in bank rate."
"We live in an uncertain world and the road ahead will have bumps on it."
"There is more uncertainty. That's why we've paired gradually and careful."
"Behind this uptick in headline inflation stands a continued gradual easing of underlying inflationary pressures in the UK economy and this is the backdrop to our withdrawal of monetary policy restrictiveness and to our policy decision today."
"In terms of pushing back on stagflation, I really would come back to that point that our judgment today is really anchored on a view that we think the disinflation trend is in place."
"I think it's important that the view on the future path of interest rates is based on the economic fundamentals. I mean, that's what really determines it."
"We think the path of disinflation remains in place, very much as we had it back in November. There will be a bump in the road, but we don't think that bump is going to have a long lasting effect."
On slowing economy:
"Metrics of business and consumer confidence have deteriorated over recent months. Contacts at the bank's agents report that consumers are more price conscious and holding back on spending. This is consistent with a slowdown in demand."
"Today, the labour market is cooling. The context is one of a weakening in economic activity."
"On the growth forecast, it's not... no, it's not a judgment only on the budget. The judgment really is that, as we said, growth has been flat as measured since, you know, really sort of spring of last year, actually...but we've had to revise down because frankly the evidence is there."
On the global economy:
"There are risks from the global economy too. It remains unclear what form global trade policies might ultimately take, and the MPC's February projection is not conditioned on any change in global tariffs."
"If there were... a broad move towards what I call fragmentation of the world economy, that would be a very significant thing. The impact is clear on growth as it is on inflation, but we would have to make that judgment."
"Individual tariffs may or may not get us there, we'll just have to wait and see where they go to."
On government's economic growth plans:
"Structural policies take time to come through. So when we're looking at a policy, a two to three year horizon here, you wouldn't expect a lot of that to come through quickly."
DAVE RAMSDEN, BANK OF ENGLAND DEPUTY GOVERNOR, MARKETS AND BANKING
On future rate moves:
"We've been saying gradual since near the start of the cutting cycle last August, and I think developments in the economy have validated a gradual approach."
On gilt markets:
"UK gilt markets have been operating in a very orderly way. There has been some repricing in response to news, whether it's fiscal perceptions or, as I've said, inflation, but they've been responding in a very orderly way, and our facilities have been operating exactly as you'd expect them to."
On gold:
"The stock has gone down by about 2% since the end of (2024) so that's important to keep that in perspective."
"The U.S. gold market has been trading at a premium to the London market and commercial gold holders have been looking to take advantage of that price differential."
"There's a lot of demand, but... we've got slots for all the people who currently want to get their gold or want to ship gold on behalf of a customer, and we're managing it."
(Reporting by UK bureau)