Pound hits three-week low after Bank of England says slowing jobs market could prompt rate cut
Date: 2025-07-14T05:45:11.000Z
Title: Introduction: Bank of England could cut rates if jobs market slows, governor says
Content: Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
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.
Andrew Bailey told The Times that 'slack' was opening up in the UK economy, following the increase to employers' national insurance contributions. That slack should create downward pressure on inflation.
Bailey insisted: 'I really do believe the path is downward' for interest rates. Bank rate is currently 4.25%, following four quarter-point cuts in the last year, with the Bank next scheduled to set rates on 7 August,
Bailey added:
'If we saw the slack opening up much more quickly, that would lead us to a different conclusion.'
'I think the path [for interest rates] is down. I really do believe the path is downward but we continue to use the words 'gradual and careful' because … some people say to me, 'Why are you cutting when inflation's above target?''
Governor Bailey also pointed to Rachel Reeves's decision to hike taxes on employers, saying companies were:
'adjusting employment and hours and also having pay rises that are possibly less than they would have been if the NICs change hadn't happened'.
Last week, the Guardian revealed that the National Trust is to cut at least 550 jobs in efforts to save £26m after changes made in Reeves's debut budget pushed up labour costs.
Hospitality firms have repeatedly warned that higher NICS will force them to cut jobs.
And indeed, new data this morning shows that the number of people hunting for jobs has surged at the fastest rate since the height of the Covid pandemic.
Following Bailey's rate cut hint, the pound has dropped by 0.2% this morning to $1.3467.
That's its lowest level since 23 June, three weeks ago, extending its recent losses.
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