{"id":83966,"date":"2025-07-14T08:25:10","date_gmt":"2025-07-14T07:25:10","guid":{"rendered":"https:\/\/www.taxresearch.org.uk\/Blog\/?p=83966"},"modified":"2025-07-14T08:25:10","modified_gmt":"2025-07-14T07:25:10","slug":"andrew-bailey-says-rate-cuts-are-coming-but-they-will-be-too-little-and-too-late-to-save-us","status":"publish","type":"post","link":"https:\/\/www.taxresearch.org.uk\/Blog\/2025\/07\/14\/andrew-bailey-says-rate-cuts-are-coming-but-they-will-be-too-little-and-too-late-to-save-us\/","title":{"rendered":"Andrew Bailey says rate cuts are coming, but they will be too little and too late to save us"},"content":{"rendered":"

As the Guardian notes this morning<\/a>:<\/p>\n

\n

The pound has dropped to a three-week low this morning, after the governor of the Bank of England said it could make larger cuts to interest rates if the jobs market slows quickly.<\/p>\n

Andrew<\/a>Bailey<\/a>\u00a0told\u00a0<\/a>The Times<\/a><\/em>\u00a0that \u201cslack\u201d was opening up in the UK economy, following the increase to employers\u2019 national insurance contributions. That slack should create downward pressure on inflation.<\/p>\n

Bailey\u00a0insisted: \u201cI really do believe the path is downward\u201d for interest rates.<\/p>\n<\/blockquote>\n

What are the problems? They are threefold.<\/p>\n

Firstly, Bailey has also issued a warning that he will not go too quickly because the inflation rate is still above target. In other words, although it is very clear that the UK economy is facing a crisis which can only get worse, he is not willing to take the action to prevent that crisis developing. In that case, whatever cut we get will be too small.<\/p>\n

Secondly, this rate cut will be too late. You cut in anticipation of a crisis, not when it is apparent that it has already emerged, as he is suggesting he might do.<\/p>\n

Thirdly, interest rate cuts have a long time lag before they have any impact on any real economic activity. That lag can be up to two years. I have been forecasting that this crisis has been emerging for at least that long, but Bailey has ignored all the evidence. He is, therefore, part of the problem, and not a part of any solution to any economic crisis that this country might now have.<\/p>\n

When will those who supposedly supply the UK with economic management learn the most basic things about macroeconomics?<\/p>\n","protected":false},"excerpt":{"rendered":"

As the Guardian notes this morning: The pound has dropped to a three-week low this morning, after the governor of the Bank of England said
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