Bank of England Outlook

LONDON (Reuters) – The Bank of England (BoE) may expedite interest rate cuts if inflation trends positively, while Middle East conflicts could increase oil prices, according to Governor Andrew Bailey in an interview with the Guardian newspaper.

Bailey mentioned the possibility of the BoE adopting a more “activist” stance regarding interest rate reductions. Currently, the BoE’s benchmark Bank Rate is at 5%, following the first reduction in four years last August. Although the bank maintained rates last month, investors anticipate another quarter-point cut in the upcoming November meeting.

Bailey expressed optimism about the lesser persistence of inflation pressures than previously feared by the BoE, but acknowledged the risks posed by geopolitical events in the Middle East. He noted, “Geopolitical concerns are very serious. It’s tragic, what’s going on. There are obviously stresses and the real issue then is how they might interact with some still quite stretched markets in places.”

Bailey added that while there seems to be a strong commitment to stabilizing the oil market, there is a risk that control may falter under severe conditions, emphasizing the need for continuous monitoring of the situation since it could deteriorate rapidly.