BoE’s Lombardelli: More evidence needed before next rate cut

Bank of England (BoE) Deputy Governor Clare Lombardelli said on Tuesday that she needs to see more evidence of easing price pressures before supporting another interest rate cut, according to Bloomberg.

Key quotes

It depends on what we see in the data.

To me, gradual means that we will need to see more evidence that this disinflation process is continuing before we can continue to ease policy.

US trade tariffs would pose a risk to economic growth.

Trade barriers are certainly negative for growth in the short, medium and long term.

Too early to quantify the effects of the proposed tariffs.

We would discuss business developments in the next meetings.

Market reaction

At the time of writing, GBP/USD is trading 0.12% higher on the day to trade at 1.2573.

The BoE FAQs


The Bank of England (BoE) decides the UK’s monetary policy. Its main objective is to achieve price stability, that is, a constant inflation rate of 2%. Its instrument to achieve this is the adjustment of basic loan rates. The BoE sets the rate at which it lends to commercial banks and at which banks lend to each other, determining the level of interest rates in the wider economy. This also influences the value of the British Pound (GBP).


When inflation exceeds the Bank of England’s target, it responds by raising interest rates, which makes access to credit more expensive for citizens and companies. This is positive for the British Pound, as higher interest rates make the UK a more attractive place for global investors to invest their money. When inflation falls below target, it is a sign that economic growth is slowing, and the Bank of England will consider lowering interest rates to make credit cheaper in the hope that companies will borrow to invest in projects that generate growth, which is negative for the Pound sterling.


In extreme situations, the Bank of England can apply a policy called Quantitative Easing (QE). QE is the process by which the BoE substantially increases the flow of credit into a clogged financial system. QE is a policy of last resort when lowering interest rates does not achieve the necessary result. The process of QE involves the Bank of England printing money to buy assets, typically government bonds or AAA-rated corporate bonds, from banks and other financial institutions. QE usually results in a weakening of the British pound.


Quantitative tightening (QT) is the reverse of QE, and is applied when the economy is strengthening and inflation begins to rise. While in QE the Bank of England (BoE) buys government and corporate bonds from financial institutions to encourage them to lend, in QT the BoE stops buying more bonds and stops reinvesting the maturing principal of the bonds that you already own. It is usually positive for the British pound.

Source: Fx Street

You may also like