Bank of England Deputy Governor: Inflation pressures are easing, but caution is still needed
Bank of England Deputy Governor Clare Lombardelli stated that despite signs of easing inflationary pressures, caution is still needed while waiting for evidence of an economic slowdown. She pointed out that wage growth remains above target, and continuing to cut interest rates is prudent. Last week's rate cut decision sparked divisions within the committee, with five members supporting a 25 basis point cut, while two advocated for a 50 basis point cut. The committee maintains a gradual and cautious easing policy guidance
According to the Zhitong Finance APP, Clare Lombardelli, Deputy Governor of the Bank of England, stated on Monday that there are signs indicating that inflationary pressures in the UK will continue to ease, but she remains cautious and will wait for evidence of an economic slowdown. Lombardelli said, "Caution is still appropriate. I will feel more reassured when I see substantial deceleration in the data over a longer period."
On May 8, the Bank of England cut interest rates for the fourth time since last August, due to the shadow of U.S. President Trump's trade war looming over the global economy. She mentioned that she was initially hesitant about whether it was necessary to cut rates last week until there were signs of progress against inflation and escalating global trade tensions convinced her.
Lombardelli stated that the progress in cooling domestic inflationary pressures in the UK was a more important factor than U.S. trade tariffs for her decision to support the rate cut last week. However, wage growth remains too high to bring inflation down to the Bank of England's target of 2%, so it is wise to continue with gradual rate cuts.
It is worth noting that last week's decision led to a split among senior officials into three factions, and the resolution was made before U.S. President Trump hinted at an impending agreement to lower UK export tariffs. Among the nine members of the Monetary Policy Committee, five supported a 25 basis point rate cut, two advocated for a larger 50 basis point cut, and two voted to keep rates unchanged. Given the global economic fluctuations triggered by Trump's comprehensive tariffs, the committee maintained a "gradual and cautious" easing policy guidance
