While it is too early to specify when, a rate cut by the central bank is imminent, Clare Lombardelli, the incoming deputy governor for monetary policy at the Bank of England (BoE), stated on Tuesday according to Reuters.
Lombardelli, currently chief economist at the Organisation for Economic Co-operation and Development, will join the BoE’s monetary and financial policy committees next July, succeeding Ben Broadbent.
Her views align with the prevailing sentiment among the BoE’s top officials, who have indicated that the next adjustment to rates will likely be a reduction, with the exact timing contingent on the evolution of the economy in the upcoming months.
Lombardelli refrained from providing a specific timeline for the initiation of a more relaxed monetary policy in the UK, but affirmed that this is the anticipated trajectory for European economies. She made her remarks during a hearing held by the parliament’s Treasury Committee.
The BoE had previously increased interest rates from 0.1 per cent to 5.25 per cent between December 2021 and August 2023 in response to a 40-year high inflation rate. A majority of economists surveyed by Reuters predict that the BoE will commence rate cuts by the third quarter of this year.
In a written submission to the committee, Lombardelli outlined the dual risks to the inflation outlook, expressing uncertainty about the extent to which the BoE’s monetary tightening has impacted the economy, potentially leading to an increasingly restrictive policy.
