Bank of England says rate cuts remain off the table

Bank of England Governor Andrew Bailey said on Wednesday that the central bank is not considering interest rate cuts, despite a recent fall in oil prices and a softening economy. Speaking at a European Central Bank conference in Sintra, Portugal, Bailey emphasized that the policy remains on hold as officials assess the delayed economic impact of the recent conflict in Iran.

Bailey stated that while there had been market expectations for rate reductions this year, such a move is currently off the table. He explained that the full effect of the energy price shock stemming from the conflict has not yet passed through to UK households, partly due to the country's energy price cap, which adjusts every three months. The cap increased by 13 percent on Wednesday, reflecting earlier wholesale cost rises.

The Governor reiterated a patient stance, arguing the Bank has the luxury of time because financial markets have already done some of its tightening work. He noted that bond yields have risen since the war began, after the Bank signaled it no longer expected to cut rates this year. This market-driven tightening allows policymakers to wait and observe how the jump in oil prices, which is...