BoE Governor Andrew Bailey, in a press conference today, stated that “rates are likely to need to remain at these levels for an extended period to bring inflation back to target on a sustained basis,” referring to the current bank rate at 5.25%.
He also noted that the full impact of the higher interest rates is yet to be fully realized, and highlighted the central bank’s vigilance towards potential financial stability risks that might emerge as a result.
Separately, BoE’s half-yearly Financial Stability Report noted, “The overall risk environment remains challenging, reflecting subdued economic activity, further risks to the outlook for global growth and inflation, and increased geopolitical tensions.”
The report also drew attention to the strains on household finances due to rising living costs and higher interest rates. It pointed out that some effects of these higher rates, particularly in terms of mortgage repayments, have yet to fully manifest.
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