LONDON (Reuters) – The Bank of England (BoE) is “much closer” to the end of its cycle of interest rate hikes but borrowing costs may need to rise further due to lingering inflationary pressures, a report said. said its governor Andrew Bailey on Wednesday.
“I think we’re much closer to the top of the cycle. And I’m not saying we’re at the top of the cycle because we have a meeting coming up,” he told the UK Parliament’s Treasury Committee. .
“But I think we’re much closer to that on interest rates, based on current data.”
The BoE has raised rates in its last 14 monetary policy meetings to deal with high inflation in Britain, the highest among developed economies. It is expected to raise it again at its next meeting, on September 21, to bring its key rate to 5.5%.
Yields on two-year and ten-year British sovereign bonds fell by three and more than a basis point respectively after Andrew Bailey’s remarks to parliamentarians.
The BoE governor also said inflation in the UK was slowing markedly but he was unsure whether this would dampen wage growth.
“Many indicators are now moving as we expected and are signaling that inflation is going to fall further and, as I have said many times, I think it will be quite steep by the end of the year. year,” he said.
“The question now is whether inflation expectations will continue to fall as headline inflation declines. (…) And will this be reflected in wage negotiations?”
(Report David Milliken and Farouq Suleiman, written by William Schomberg, Blandine Hénault for the , edited by Bertrand Boucey)
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