Bank of England boss Bailey says interest rates near their peak
The governor of the Bank of England said that painful interest rate hikes may soon end as inflation is heading for a ‘quite significant’ decline.
Andrew Bailey told MPs the bank is approaching ‘top of the cycle’ on rates – which have risen 14 times since December 2021.
He told the Treasury select committee: ‘There was a time when it was clear that there needed to be further rate increases and the question for us was by how much and over what time frame.
‘We are not at that stage now. I think the decision is much better now. I think we are now very close to the top of the cycle.
Are we nearly there yet? Bank of England boss Andrew Bailey says rates could be close to peak
He further said, ‘I am not saying that we are at the top of the circle because we have a meeting [of the rate-setting Monetary Policy Committee] for coming.
‘But I think based on the current evidence, we are pretty close to that on interest rates.’
Mr Bailey said the evidence showed inflation would continue to decline and ‘see a more significant increase towards the end of this year’.
But he stressed that his comments should not be taken as indicating the bank’s next rates decision later this month – when the market expects rates to rise again to 5.5 per cent.
Inflation remains at around 6.8 per cent and financial markets expect interest rates to reach 5.75 per cent by the end of the year. These expectations have gone back a bit following Mr Bailey’s comments.
However, analysts warn it could take until next year before it begins to decline, and the Bank’s chief economist Hugh Pill recently said that rates would be held for a long time, rather than reaching a sharp peak and falling back. May have to stay high.
The UK’s biggest mortgage lender revealed this morning that high interest rates are weighing on the housing market, with Halifax’s latest index showing a 4.6 per cent drop in house prices over the previous year.
According to Halifax, the typical homeowner has seen their property value fall by £14,000 and the average home now costs £279,569. But the property boom due to the pandemic has reached such an extent that it only takes values back to the levels seen in early 2022.
Source: www.dailymail.co.uk
