Easier borrowing

Bank economist hints at softer interest rate moves

Bank of England
The Bank of England remains committed to hitting 2% inflation target (pic: Terry Murden)

Bank of England chief economist Huw Pill yesterday gave one of the strongest hints yet that interest rate policy will be eased in the coming months.

He said policymakers were wary of too much monetary tightening to curb inflation, leaving analysts to believe a softer approach will be adopted.

Following Thursday’s rise from 3.5% to 4% some are already predicting the Bank to hold rates at next month’s meeting of the monetary policy committee, breaking a series of ten consecutive increases.

Two members of the committee, Silvana Tenreyro and Swati Dhingra, last week voted for no change to the base rate.

Mr Pill said in a radio interview that bank needed to assess the full impact of these rate rises which had not yet been felt in the economy.

“It is important we guard against the possibility of doing too much,” he said, while stressing the bank’s commitment to its 2% inflation target.

He said the economy would have only a shallow recession, confirming the growing consensus which is a marked contrast to last year’s warnings by the bank’s governor Andrew Bailey.

Mr Pill said there had been a change in the language which had led to money markets scaling back their expectations for rate rises.

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