The pound sank by 0.7 per cent against the dollar after Andrew Bailey said that there was still a \u201cfurther journey down\u201d in interest rates provided that inflation cools.<\/p>\n
In an interview with West Midlands Life as part of a visit to the region on Wednesday, the governor of the Bank of England said any further cuts to interest rates would \u201cdepend on the path of inflation going down\u201d.<\/p>\n
Bailey\u2019s comments put downward pressure on sterling, which tends to weaken when the likelihood of lower borrowing costs increases. The pound dropped to $1.34, but so far this year is up by more than 7 per cent against the dollar.<\/p>\n
Bailey, who was part of the seven-strong majority of rate-setters at the Bank\u2019s meeting this month who voted to keep interest rates<\/a> unchanged at 4 per cent, signalled that the UK economy had weakened because of sluggish consumer spending.<\/p>\n \u201cPeople are being quite cautious at the moment. Of course, that affects spending, so that has an effect on the state of the economy because there isn\u2019t as much,\u201d Bailey, 66, said. <\/p>\n \u201cPeople aren\u2019t going out as much; they\u2019re not shopping as much; they\u2019re not going out to restaurants and so on as much; that affects the overall state [of the] economy.\u201d<\/p>\n According to the Office for National Statistics, retail sales<\/a> last month were 2.1 per cent below their pre-pandemic level in February 2020. Gross domestic product flatlined in July but did grow at the fastest pace in the G7 group of the world\u2019s advanced economies in the first three months of the year.<\/p>\n \u2022 UK inflation to be highest in G7 this year, OECD warns<\/a><\/p>\n