Bank of England Signals Gradual Interest Rate Cuts Amid Inflation Risks

Deputy Governor Clare Lombardelli emphasizes the need for caution as inflation risks remain and outlines major reforms to monetary policy operations.

Deputy Governor Clare Lombardelli expressed concerns that inflation could exceed forecasts, potentially requiring costly monetary policy interventions.
The Bank of England is proceeding with gradual interest rate reductions, with the current rate at 4.75% following two recent cuts.
Inflation rose to 2.3% last month, with projections suggesting it could climb to 3% next year, raising questions about the sustainability of meeting the 2% target.
Lombardelli highlighted ongoing reforms to the Bank’s monetary policy process, including adopting a scenario-based approach to economic forecasting and improving internal modeling systems.
The Bank plans to implement recommendations from former Federal Reserve Chair Ben Bernanke, marking the most extensive overhaul of its operations since 1997.