Bank of England might consider interest rate cuts by summer, says Chief Economist Huw Pill

Bank of England’s Chief Economist Huw Pill expressed on Tuesday that it might be “not unreasonable” for the central bank to start contemplating a reduction in interest rates over the summer if current economic trends continue.

Pill’s comments came during his speech at the Institute of Chartered Accountants in England and Wales Regions’ Economic Summit, signaling a potentially significant shift in BoE’s monetary policy approach in the coming months.

Progress on inflation but challenges remain

Despite the optimistic outlook on interest rates, Pill emphasized that the Bank of England is still in the midst of its efforts to control inflation and that “there is still more work to be done.”

The bank has been striving to bring inflation down closer to its target of 2%, but current pay growth rates are posing challenges.

Wage growth exceeds targets

Pill also highlighted concerns regarding the rate of pay growth, which remains “quite well above what would be consistent for meeting the 2% inflation target” sustainably.

This factor could influence the central bank’s decisions on whether to adjust interest rates sooner or maintain a more cautious stance for a longer period.