Market Analysis

The Bank of England may act more swiftly to lower interest rates if inflation continues to show positive trends, but tensions in the Middle East could drive oil prices higher, Governor Andrew Bailey told the Guardian.

Bailey mentioned that the BoE might adopt a more proactive stance in its interest rate cuts. Currently, the Bank Rate stands at 5% following its first rate reduction in four years in August. While the central bank decided to maintain rates last month, investors are anticipating another quarter-point cut in its upcoming November meeting.

In his conversation with the Guardian, Bailey expressed optimism that inflation pressures have been less persistent than previously expected by the Bank, though he acknowledged the risks posed by the situation in the Middle East.

"Geopolitical concerns are extremely serious," he stated. "It’s tragic what is happening. There are significant stresses, and the real question is how these may interact with still quite strained markets in certain areas."

He noted a "strong commitment to maintain stability in the oil market," but cautioned, "There comes a point where that control could falter if the situation worsens significantly. Continuous monitoring is essential, as things could deteriorate quickly."

Paraphrasing text from "Reuters" all rights reserved by the original author.