Interest rate cuts should still be ‘a long way off’ despite falling inflation, a key Bank of England official has warned.
Jonathan Haskel said the drop to 3.4 per cent was ‘very good news’ but rate-setters are instead focused on ‘the persistent and the underlying inflation’.
‘I think cuts are a long way off,’ he told the Financial Times. The comments will dampen hopes over the timing of a rate cut.
Rates have been hiked to 5.25 per cent as the Bank of England battled inflation.
But hopes of a cut have been raised as inflation falls and Bank Governor Andrew Bailey said ‘things are moving in the right direction’.
Cautious: Rate-setting committee-member Jonathan Haskel (pictured) said the drop in inflation to 3.4% was ‘very good news’ but ‘not informative about what we really care about’
They have also been stoked by the retreat of the two most hawkish rate-setting committee members – Haskel and Catherine Mann.
This week, Mann said markets were ‘pricing in too many cuts’. By last night, bets on a June rate cut had faded and August was seen as more likely.
Figures from the Office for National Statistics yesterday confirmed that the economy shrank for two successive quarters at the end of last year – meeting the technical definition of recession.
Over the six-month period, the decline was 0.4 per cent.
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