Bank of England's Bailey emphasizes gradual rate cuts amid low inflation
- Inflation rates in France and Spain have decreased to 1.5% and 1.7%, respectively, while US inflation is at 2.2%.
- The Bank of England has only cut interest rates by a quarter point, contrasting with more aggressive cuts by the European Central Bank and the US Federal Reserve.
- Experts warn that the Bank's cautious approach may hinder economic growth and that quicker rate cuts are necessary to support small businesses and mortgage holders.
The Bank of England is facing pressure to reduce interest rates as inflation rates in Europe and the US have fallen significantly. Recent data shows that inflation in France and Spain dropped to 1.5% and 1.7%, respectively, while the US personal consumption expenditure inflation fell to 2.2%. In contrast, the Bank of England has been more cautious, only cutting rates by a quarter point last month, despite inflation nearing 2%. Governor Andrew Bailey emphasized that any rate reductions will occur gradually. This cautious approach has led to a stronger pound against the euro and dollar, but it has raised concerns among mortgage holders and small businesses. The Federation of Small Businesses highlighted that high finance costs are hindering growth and investment, urging for a more aggressive rate cut strategy to stimulate the economy. Experts warn that delaying further cuts could result in the Bank falling behind its counterparts in Europe and the US, potentially exacerbating economic challenges.