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10/07/24
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Timing Of First Rate Cut in UK “Open Question” – BoE
On Wednesday Huw Pill, the Chief Economist of the Bank of England dampened expectations of an interest rate cut in August as he focused on the UK economy’s strong price pressures, and said the timing of this move was an “open question”.
Pill said services wage growth and inflation remained uncomfortably strong, leading to investors decreasing bets on a rate cut on August 1. Rate futures indicated a 50% probability after Pill’s comments, down from Tuesday’s 62%.
Pill said in an unscripted conclusion of a speech to an Asia House think tank, he thought it was an open question whether the timing for a rate cut was now.
Pill was equivocal on the evidence of inflation pressures in the economy in the published text. He added that the data indicated inflation had been contained, citing the strength of domestic price growth.
He said although the BoE’s “when” characterization of prospective rate cuts still appeared appropriate, there was still work to do to dampen domestic price pressures.
Last month Pill, a centrist on the Monetary Policy Committee, voted with most of his colleagues to keep interest rates at 5.25%.
Outgoing MPC member Jonathan Haskel said on Monday he wasn’t ready to vote for rate cuts yet.
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