There is a big if when it comes to interest rate cuts...

Andrew Bailey, governor of the Bank of England, said in an interview that the Monetary Policy Committee (MPC) could be "a bit more activist" in bringing rates down.

- JAMES MOORE

Those comments were enough to send the City into a panic, and the gains the pound had made in the last couple of weeks were quickly wiped out. Sterling lost more than a percentage point against the dollar, euro and yen – a minor earthquake on the currency markets.

Economists meanwhile scrambled to update their forecasts, as the expectation that the Bank would take a more cautious approach than either the US Federal Reserve or the European Central Bank was rapidly reassessed.

However, in a post on Twitter/X, Panmure’s Simon French correctly highlighted a small – but highly important – word of Bailey’s that much of the square mile ignored, “if”. The MPC could be a bit more activist if the news on prices continues to be good, and if inflation continues to behave in the way the Bank hopes it will. This, obviously, means it will need to stay within spitting distance of the Bank’s 2 per cent target.