More interest rate cuts could be on the cards as long as inflation remains under control, the Bank of England Governor suggested.

Andrew Bailey said the Bank would be a “bit more aggressive” in its approach to the base interest rate in the coming months.

He told The Guardian newspaper: “I think the economy has come through the shocks of the last five years better than many of us feared. So there’s a base there to develop.”

But he warned that the developing situation in the Middle East was a threat to economic stability in the UK.

Narrow vote

Inflation currently stands at 2.2%, which is slightly above the Government’s target of 2%. The Bank cut the base rate in August from 5.25% to 5%, in a narrow vote, reducing the rate from a 16-year high.

The cut meant that millions of households on variable rate mortgages saw a reduction in their bills.

The Bank’s Financial Policy Committee estimated 1.7 million homeowners benefited from reductions of around £120 per year, The Times reported.

However, around a third, or three million borrowers, who are currently on fixed deals below 3%, will need to remortgage by the end of 2027.

Nationwide move

Recently, Nationwide announced that it is allowing first-time buyers to borrow as much as six times their annual salaries.

Mark Harris, CEO at SPF Private Clients, says: “A more aggressive approach to rate reductions has been welcomed by the markets, with swaps falling on the back of the Governor’s comments, which should feed through to even lower mortgage pricing.

“A number of lenders are already in the process of repricing,” he says.

“This ongoing rate war among lenders is great news for borrowers as there are some really compelling deals being launched, which will go some way to helping affordability.”