Bank of England Signals Potential Rate Cut in May After Inflation Eases to 2.8%
Governor Andrew Bailey indicated during a press conference that the Monetary Policy Committee is now considering a modest rate reduction following three consecutive months of declining consumer price inflation. Core CPI dropped to 3.1%, down from 3.6% at the end of 2025, prompting a shift in forward guidance. Gilt yields responded immediately, with two-year government bonds falling 8 basis points to 3.94%. Analysts note this could represent the beginning of an easing cycle, although the MPC remains cautious about services inflation, which holds at 4.5%.