A day after leaving UK interest rates on hold again, the governor of the Bank of England has dropped a hint that cuts are coming.
Andrew Bailey has declared that rate cuts will be “in play” at future meetings of the Bank's monetary policy committee amid signs that tighter policy had quelled the risk of a wage-price spiral.
The Bank has been worried for many months that inflationary expectations will become embedded in the economy. But in an upbeat interview with the Financial Times, Bailey said: "It’s like the Sherlock Holmes dog that doesn’t bark. If the second-round effects don’t come through, that’s good because monetary policy has done its job.
"We have an increasingly positive story to tell on that.”
Bailey said the global shocks that pushed up UK inflation to the highest since the 1970s were now unwinding.
He was speaking after the Bank left interest rates at 5.25%, with two of its policymakers dropping their calls for even higher borrowing costs. The MPC voted 8-1, with Swati Dhingra continuing to vote, alone, for a cut in rates.
Retail sales volumes across Great Britain stagnated in February, data shows.
The Office for National Statistics has reported that sales volumes were flat last month, following the strong 3.6% growth in January, after December’s slump.
The ONS said: "Sales volumes in clothing and department stores grew because of new collections but falls in food stores and fuel retailers offset this growth. Meanwhile, online sales increased, particularly for clothing retailers, as wet weather affected footfall."
On an annual basis, volumes were 0.4% lower than a year ago, and were 1.3% below their pre-coronavirus pandemic level in February 2020.
More broadly, sales volumes fell by 0.4% in the three months to February 2024 when compared with the previous three months.
On an annual basis, retail sales volumes were 1% lower than in the quarter to February 2023.
UK consumer confidence stalled in negative territory this month but people are slightly more positive about their own finances.
The GfK consumer confidence index remained at -21 in March, unchanged from February, amid pessimism over the economic situation.
But households have turned positive about the outlook for their personal finances for the first time in more than two years. GfK’s index of personal finances over the next 12 months rose by two points at +2, which is 23 points higher than this time last year.
The agenda • 9am GMT: IFO survey of Germany’s business climate • 10.30am GMT: Bank of Russia sets interest rates • 11am GMT: CBI industrial trends survey of UK manufacturing
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