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The governor of the Bank of England has told MPs that interest rates may not rise much further amid expectations that inflation is set to fall “markedly” by the end of the year.
Andrew Bailey said rates were “much nearer now to the top of the cycle” following a 14th consecutive hike – to 5.25% – last month.
His comments will give some hope to homeowners and the wider housing market, which has experienced a slump in recent months amid high mortgage rates.
Speaking to the Commons Treasury Committee on Wednesday, the governor also reiterated his prediction that inflation is likely to be down significantly this winter.
But he also cautioned that it may temporarily “tick up” following the increase in petrol prices in August and amid concerns over the rising cost of oil.
Mr Bailey told MPs that while there had previously been a period when “it was clear that rates needed to rise”, the Bank was “not in that place anymore”.
He added: “judgements now are much finer… I think we are much nearer now to the top of the cycle.
“And I’m not therefore saying we’re at the top of the cycle, because we’ve got a meeting to come, but I think we are much nearer to it, on interest rates, on the basis of current evidence.”
Most economists expect the Bank to raise interest rates for a 15th time in a row to 5.5% later this month, and predict rates to peak at 5.75%, according to a poll.
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While inflation has gradually been coming down from its peak of 11.1% last October, the rate of price rises – which was 6.8% in the year to July – remains high.
When asked about inflation, the governor told MPs: “Many of the indicators are now moving as we would expect them to move, and are signalling that the fall in inflation will continue and, as I’ve said a number of times, I think [it] will be…
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