Huw Pill, the chief economist at the Bank of England, appears hesitant about an interest rate cut in August but acknowledges it’s a matter of “when” rather than “if”. Speaking at Asia House in London, Pill highlighted recent economic data suggesting potential “upside risks” to his assessment of inflation persistence.
Recent figures on services inflation and wage growth, key indicators for inflation persistence, continue to show robust underlying dynamics. Services inflation decreased slightly to 5.7% in May from 5.9% in April, while annual private sector wage growth remains around six percent.
Despite headline inflation hitting target levels, Bank economists remain concerned about maintaining this stability with strong underlying price pressures. Pill noted the complexity of these data series but emphasized the persistent nature of UK inflation.
Looking ahead to the Monetary Policy Committee meeting on 1 August, Pill emphasized the need for more data before making policy decisions. While the Bank of England held interest rates at 5.25% in June, minutes revealed a finely balanced decision.
Following Pill’s remarks, the pound strengthened against the dollar, and the FTSE 100 edged lower as market expectations for an August rate cut wavered around 50%. Despite concerns, Pill expressed confidence that recent rate hikes had helped stabilize inflationary pressures.
“In the absence of major new shocks, the likelihood of Bank Rate cuts in the future remains a matter of ‘when’ rather than ‘if’,” he concluded.
For further reading:
– [August interest rate cut on a knife edge after ‘nuanced’ Bank of England survey](link to article)
– [Related Topics and People & Organizations](link to related topics)
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By Benjamin
Huw Pill, the chief economist at the Bank of England, appears hesitant about an interest rate cut in August but acknowledges it’s a matter of “when” rather than “if”. Speaking at Asia House in London, Pill highlighted recent economic data suggesting potential “upside risks” to his assessment of inflation persistence.
Recent figures on services inflation and wage growth, key indicators for inflation persistence, continue to show robust underlying dynamics. Services inflation decreased slightly to 5.7% in May from 5.9% in April, while annual private sector wage growth remains around six percent.
Despite headline inflation hitting target levels, Bank economists remain concerned about maintaining this stability with strong underlying price pressures. Pill noted the complexity of these data series but emphasized the persistent nature of UK inflation.
Looking ahead to the Monetary Policy Committee meeting on 1 August, Pill emphasized the need for more data before making policy decisions. While the Bank of England held interest rates at 5.25% in June, minutes revealed a finely balanced decision.
Following Pill’s remarks, the pound strengthened against the dollar, and the FTSE 100 edged lower as market expectations for an August rate cut wavered around 50%. Despite concerns, Pill expressed confidence that recent rate hikes had helped stabilize inflationary pressures.
“In the absence of major new shocks, the likelihood of Bank Rate cuts in the future remains a matter of ‘when’ rather than ‘if’,” he concluded.
For further reading:
– [August interest rate cut on a knife edge after ‘nuanced’ Bank of England survey](link to article)
– [Related Topics and People & Organizations](link to related topics)