Market News – Huw Pill, the Bank of England’s (BoE) Chief Economist, hinted on Monday that the bank might delay reducing interest rates from their current 15-year high until mid-2024. He found the financial market’s prediction of the first-rate cut to the Bank Rate in August 2024 reasonable.
Bank of England Rate Cuts – Huw Pill Predict Delay
Bloomberg—During a BoE online presentation, Pill suggested reassessing this timeline if no new developments occur. However, he acknowledged the probability of changes over the next nine months. Last week, the BoE kept its benchmark rate at a 15-year high of 5.25%, stating it had no plans for a reduction as it continues to tackle inflation, which stood at 6.7% in September. This rate is lower than the 11.1% peak in October 2022 but still significantly above the 2% target.
Pill emphasized the BoE’s dedication to mitigating the risk of high inflation. However, he warned that a prolonged restrictive policy could trigger a recession or excessive economic slowdown. The BoE’s latest forecasts predict that the UK’s economy will remain stagnant over the next two years and grow by less than 1% in 2026. Many analysts believe the economy is already entering a recession.
Pill admitted that slowing the economy to combat inflation is challenging and assured that the Monetary Policy Committee is fully aware of the impact of its decisions, especially on individuals with lower incomes.