Cautious Approach to Interest Rate Cuts

LONDON (Reuters) – Bank of England interest rate-setter Megan Greene expressed her belief in a cautious approach to cutting borrowing costs in a recent column for the Financial Times.

Greene noted that consumption could vary, potentially being stronger or weaker than anticipated. She emphasized the need for a careful and gradual strategy towards monetary easing due to associated risks.

Previously, in September, Greene had cautioned against cutting borrowing costs too quickly due to concerns over long-term inflation pressures. Likewise, BoE Governor Andrew Bailey mentioned that the central bank might adopt a more aggressive approach to cutting interest rates should inflation pressures continue to decrease.

Recent data indicated that British inflation had dipped below the BoE's target of 2%, with closely monitored underlying inflation pressures also falling. As a result, investors are nearing certainty of a 25-basis point cut in the Bank Rate at the upcoming BoE meeting in November, with significant bets placed on another reduction in December.