Summer could bring rate cut – Bank of England’s Broadbent

The Bank of England is considering a potential reduction in interest rates in the upcoming months, Deputy Governor Ben Broadbent said on Monday, according to Reuters.

This decision hinges on how quickly the impact of the 2022 inflation surge on wage growth and prices diminishes.

Broadbent, who will cast his final vote as a Monetary Policy Committee member in June, expressed optimism as prices are now rising slower than wages, aiding households in recovering from the inflation spike.

Broadbent, who has served as the deputy governor for monetary policy since 2014, is set to step down at the end of June. He will be succeeded by Clare Lombardelli, a former senior finance ministry official.

As Broadbent prepares to leave his post, he emphasises the importance of maintaining the Bank of England’s operational independence, especially if supply-side shocks to Britain’s economy become more frequent.

Earlier this month, the Monetary Policy Committee voted 7-2 to maintain interest rates at a 16-year high of 5.25 per cent.

Broadbent, who was among the seven who voted for an unchanged policy, noted that opinions within the committee vary depending on the amount of evidence needed to justify a rate cut.

The Bank of England has faced criticism from some politicians in Prime Minister Rishi Sunak’s Conservative Party, which is currently lagging in opinion polls ahead of the January 2025 election.

The criticism came as inflation soared into double digits and the bank’s bond sale programme incurred significant losses.