It's time to cut interest rates to give homeowners a break

Andrew Bailey, the Bank of England’s governor, has suggested that interest rates could be coming down faster than previously expected.

- JAMES MOORE

“If you’d ask me what inflation was going to be now, it would have been a bit higher than it is today,” said the governor at an event organised by the Institute of International Finance in the US on Wednesday night. “Disinflation is happening, I think, faster than we expected it to.”

That might not look that big a deal until you consider how cautiously Monetary Policy Committee (MPC) members have to be with their market-moving words. The Consumer Prices Index (CPI) took a September tumble, falling from 2.2 per cent to 1.7 per cent, below the City’s forecasts (1.9 per cent), the Bank of England’s 2 per cent target and where most people expected it to be just a few months ago.

Mr Bailey, as he usually does, caveated his words. “We have still genuine question marks about whether there have been some structural changes in the economy,” he said.

He also returned to his oft-repeated concerns about the price of services, which increased at an annual rate of 4.9 per cent in the last set of figures, down from 5.6 per cent but still higher than the MPC – which sets interest rates – is comfortable with. He said: “We’ve got to see services prices inflation come further down.”