Interest rates may have risen as high as they need to, the governor of the Bank of England has said.
Responding to questions from MPs on the Treasury select committee, Andrew Bailey hinted that the Bank of England is through with lifting interest rates and stressed inflation was on course for a “marked” decline.
“There was a period where it seems to me it was clear that rates needed to rise… and the question for us was how much and over what time frame, but we’re not I think in that phase any more,” Bailey said.
“I think we are much nearer now to the top of the [interest rate] cycle.”
Bailey insisted that interest rates were already in “restrictive” territory and the central bank is “much nearer now to the top of the [tightening] cycle”.
Sterling tumbled to a three-month low against the dollar following Bailey’s comments.
The governor’s comments echo those of chief economist Huw Pill, who said last week he favoured keeping rates level for a longer period of time.
Bailey added that he expects inflation to “fall quite markedly” this year.
