From Rachel Reeves’ Budget to Trump’s trade war- Bank of England Governor Andrew Bailey answers YOUR questions THE Bank of England yesterday lowered interest rates from 4.75 per cent to 4.5, while halving its growth forecasts amid fears about the economy.
Q: The Bank’s role is to manage inflation through monetary policy but the Government’s fiscal policy, including tax changes, impacts inflation.
Cutting rates by too much now would just mean higher inflation and higher interest rates further down the line.
The Bank’s Monetary Policy Committee has to perform a delicate balancing act — keeping rates sufficiently high to stop a return of rapid inflation, but not suffocating companies’ plans to invest or people’s hopes of owning a home.
But we do think inflation will return to our 2 per cent target, so we’re being gradual and careful in our approach to further rate cuts.
