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Bank of England governor Andrew Bailey has said that UK inflation data from recent months was “quite encouraging”. 

During a House of Lords committee meeting yesterday, he also said interest rates could start to fall soon – but interestingly, he predicted they will stay above 2% for years to come. 

Mr Bailey said rates were unlikely to go back to zero.

“We will not come back down to where we were pre-COVID,” he said. 

Interest rates remained at or below 1% from 2009 to June 2022 as the Bank sought to boost economic growth following the financial crash. 

Asked about the future “neutral” level of rates which neither stimulates nor restricts economic activity, the governor said: “I doubt we’re going back to zero. It will be lower than it is today because it is restrictive today, it will be somewhere in the middle.”