By LONDON (Reuters) – The Bank of England could move more quickly to cut interest rates if there is further good news on inflation but conflict in the Middle East could push up oil prices, Governor Andrew Bailey told the Guardian newspaper.
There was a chance the BoE could become “a bit more activist” in its approach to cutting interest rates, he added.
The BoE’s benchmark Bank Rate now sits at 5% after August’s first reduction in borrowing costs in four years. The British central bank kept rates on hold last month but investors expect another quarter-point cut at its November meeting.
The Guardian quoted Bailey as saying he was encouraged that inflation pressures had proved less persistent than the Bank had feared, although events in the Middle East posed a risk.
“Geopolitical concerns are very serious,” Bailey told the newspaper. “It’s tragic, what’s going on. There are obviously stresses and the real issue then is how they might interact with some still quite stretched markets in places.”
There appeared to be “a strong commitment to keep the (oil) market stable”, he added, but warned, “There’s a point beyond which that control could break down if things got really bad. You have to continuously watch this thing, because it could go wrong.”