In an interview with The Guardian, Bailey said the Bank of England could become “a bit more aggressive” regarding the base rate, as long as inflation remained manageable.
This was a change from market expectations and Bailey’s own comments that the central bank would take a gradual approach to the base rate after inflation stayed slightly above the 2% target at 2.2% in the year to August.
That week, the Bank of England decided to hold the base rate at 5%, with the Monetary Policy Committee (MPC) saying this was because of “the need to squeeze persistent inflationary pressures out of the system”.
A week after this decision, Bailey said: “I do think the path for interest rates will be downwards, gradually.”
However, in the recent interview with The Guardian, Bailey said if news on inflation continued to be good, the central bank could be “a bit more activist” with cutting interest rates.
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The Bank of England’s MPC will hold its next meeting to decide the base rate on 7 November.
