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Bank of England may need to cut rates sooner, says Policymaker

Bank of England may need to cut rates sooner, says Policymaker

A monetary policymaker at the Bank of England, Silvana Tenreyro, has suggested that the central bank might need to reduce interest rates earlier than expected. This comes after recent rate hikes and concerns about weakening inflation pressures.

According to Property Industry Eye, Tenreyro, who was one of the two policymakers who voted against the 25 basis-point rate increase to 4.25% last month, emphasised that the current level of the Bank Rate might require a quicker and earlier reversal to prevent a significant undershoot in inflation. She has consistently opposed rate hikes since December.

Speaking at the Royal Economic Society's annual conference in Glasgow, Tenreyro pointed to emerging signs of a slowdown in the labour market, particularly in private-sector pay growth data, which has declined in recent months. She expects inflation to fall well below the Bank of England's 2% target.

Investors are currently predicting a 75% chance of a further quarter-point rate hike by the Bank of England in May and a more than 50% probability of another increase by August. However, Tenreyro's remarks highlight the potential need for a looser monetary stance to meet the central bank's medium-term inflation target.


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