In an interview with the FT, Hunt said the UK needs to “throw off [its[ pessimism and declinism about the UK economy” in the upcoming year.
Bank of England meets expectations as rates held at 5.25%
Hunt claimed there was a “reasonable chance that if we stick to the course we are on, we are able to bring down inflation, the Bank of England might decide they can start to reduce interest rates”.
He said that a cut to UK interest rate levels in 2024 would mark a decisive shift to the economic mood: “That probably is the moment when people will begin to have more confidence about their own personal prospects and the prospects of their family.”
CBI forecasts no Bank of England rate cuts until at least 2026
At the latest Monetary Policy Committee meeting, the BoE held rates at 5.25%, with the bank asserting that its monetary policy was expected to remain restrictive “for an extended period of time”, a clear divergence from the dovish tone the Federal Reserve had adopted at its rates policy meeting.
In his Autumn Statement, the chancellor reaffirmed the government’s commitment to bringing inflation down to the central bank’s 2% target and promised 110 measures aimed at growing the UK economy.
This optimism came in the face of the Office for Budget Responsibility’s accompanying assessment, which revised its GDP growth forecasts downwards and raised inflation predictions.
The OBR predicted inflation would average 4.8% in the final quarter of this year, 1.9 percentage points higher than predicted in the March forecast.
According to the OBR, inflation was not set to fall to the 2% target until Q2 2025, a year later than previously predicted.
UK inflation did fall further than expected in the latest monthly results, dropping to 3.9%, better than economists’ 4.4% expectations.
