Published by Global Banking & Finance Review®
Posted on October 14, 2025
1 min readLast updated: January 21, 2026
Add as preferred source on GoogleThe IMF advises the Bank of England to be cautious with interest rate cuts due to rising inflation expectations, impacting economic forecasts.
WASHINGTON (Reuters) -The Bank of England should be "very cautious" about further interest rate cuts due to rising inflation expectations among households and investors, the International Monetary Fund's chief economist, Pierre-Olivier Gourinchas, said on Tuesday.
The IMF had just forecast that Britain's economy would have the highest inflation in the Group of Seven rich economies this year and next, largely due to what it judges will be temporary factors, but Gourinchas said there was a risk inflation could be higher.
"The path forward for the Bank of England should be very cautious in its easing trajectory and make sure that inflation is on the right track," Gourinchas told a press conference.
(Reporting by David Milliken; editing by Dan Burns)
Monetary policy refers to the actions taken by a country's central bank to control the money supply and interest rates to achieve macroeconomic objectives such as controlling inflation, consumption, growth, and liquidity.
Inflation is the rate at which the general level of prices for goods and services rises, eroding purchasing power. It is typically measured by the Consumer Price Index (CPI) or the Producer Price Index (PPI).
Interest rates are the cost of borrowing money or the return on savings, expressed as a percentage. They are influenced by central bank policies and can affect economic activity and inflation.
Financial stability is a condition in which the financial system operates effectively, with institutions able to withstand shocks and continue to provide essential services, thereby supporting economic growth.
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