. Bank of England's Broadbent Hints at Potential Rate Cut This Summer

Bank of England’s Broadbent Hints at Potential Rate Cut This Summer

Bank of England’s Broadbent Hints at Potential Rate Cut This Summer

20 May 2024

Broadbent from the Bank of England suggests a potential rate cut this summer.

Deputy Governor Ben Broadbent stated on Monday that the Bank of England might consider reducing interest rates in the coming months, contingent on the speed at which the subsequent effects on wage growth and prices, resulting from the inflation surge in 2022, alleviate.

Prior to his last vote in June as a Monetary Policy Committee member, Broadbent referenced survey findings from businesses indicating that a significant contributor to inflationary pressures, namely robust wage growth, was expected to diminish gradually.

Nevertheless, Broadbent expressed optimism, noting that prices were currently increasing at a slower pace than wages. This development was assisting households in regaining lost ground amid the previous inflation surge.

“At a central banking conference hosted by the BoE, Broadbent remarked, ‘The more ground that’s recovered, the less there is to make up relative to some theoretical norm.'”

He explained that this was the reason why he was satisfied with mitigating the lasting impact of inflation pressures incorporated in the BoE’s most recent forecasts, released earlier this month.

Broadbent stated that if the forecasts develop as anticipated, indicating a need for less stringent policy eventually, there’s a chance that the Bank Rate might be reduced sometime during the summer.

Earlier in the current month, the Bank of England’s Monetary Policy Committee (MPC) decided by a margin of 7-2 to maintain interest rates at 5.25%, a level not seen in 16 years. Broadbent, one of the seven advocating for the status quo, highlighted the divergent opinions within the MPC regarding the threshold of evidence required to justify rate cuts.