Market Analysis

Bank of England Governor Andrew Bailey stated in an interview published on Tuesday that interest rates are expected to gradually decline towards a "neutral rate." He expressed optimism about the downward trend in inflation, saying, "I am very encouraged by the path of inflation."

As for the direction of interest rates, Bailey remarked, "I do believe the path will be downwards, but gradually." The interview was featured in the Kent Messenger newspaper's online edition.

When asked about the future level of interest rates, Bailey indicated they are unlikely to return to the historically low levels close to zero, as seen four years ago. He predicted they would stabilize at a "neutral rate."

Last week, the BoE maintained its main interest rate at 5%, having previously reduced it from a 16-year peak of 5.25% in August.

Economists surveyed by Reuters anticipate that the BoE will lower rates to 4.75% during its upcoming meeting in November. Bailey, speaking last week, expressed confidence in further rate cuts but stressed that these reductions would need to be gradual. He added that the central bank must be cautious, avoiding cuts that are either too rapid or too deep.

Paraphrasing text from "Reuters" all rights reserved by the original author.