By David Milliken<\/p>\n
LONDON (Reuters) -Bank of England Chief Economist Huw Pill said on Friday inflation pressures were likely to weaken further but there was a risk that future interest rate cuts could be delayed if higher inflation partly reflected longer-term behavioural shifts.<\/p>\n
Pill was one of four BoE policymakers who voted against Thursday’s decision to cut interest rates to 4% from 4.25%, the BoE’s fifth rate cut since August 2024.<\/p>\n
“There’s still a little bit further downward to go with Bank Rate. I think the pace at which those downward moves perhaps go forward is a little bit less clear than the pace that we’ve seen over the last year,” Pill said in an online presentation to businesses that take part in BoE surveys.<\/p>\n
British consumer price inflation rose to 3.6% in June. The BoE on Thursday revised up its forecast to show it hitting 4% in September and not returning to its 2% target until the second quarter of 2027.<\/p>\n
Pill said that upward risks to inflation had risen at the two to three-year horizon which the Monetary Policy Committee focuses on when it sets rates.<\/p>\n
British inflation has spent almost all of the past four years above its 2% target, largely due to knock-on effects from Russia’s full-scale invasion of Ukraine and to a lesser extent the pandemic impact on Britain’s labour market.<\/p>\n
MPC members differed on the extent to which recent higher inflation was due to increased global food prices, one-off rises in regulated water bills and similar changes, or whether the above-target inflation was starting to become entrenched in domestic businesses’ price-setting and how wages are negotiated.<\/p>\n
“If that’s more the driver of this increase in the upside risk to inflation, that might lead us to … have to question whether the pace at which we’re reducing Bank Rate over the last year, a pace of one quarter-point cut every quarter, is that sustainable?,” Pill said.<\/p>\n
“I think that’s kind of where more of the dissenting members focus, the members of the committee who were voting ultimately to hold rates at 4.25% yesterday,” he said.<\/p>\n
Investors trimmed their expectations for BoE rate cuts after Thursday’s announcements by the central bank and are not fully pricing in a next reduction until February’s meeting, compared with December previously.<\/p>\n
(Reporting by David Milliken and William Schomberg; Editing by Alison Williams)<\/p>\n","protected":false},"excerpt":{"rendered":"By David Milliken LONDON (Reuters) -Bank of England Chief Economist Huw Pill said on Friday inflation pressures were…\n","protected":false},"author":2,"featured_media":53175,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[64,63,44354,44358,44357,99,44359,164,44355,44356],"class_list":["post-53174","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-au","tag-australia","tag-bank-of-england","tag-bank-rate","tag-boe-rate","tag-business","tag-consumer-price-inflation","tag-economy","tag-huw-pill","tag-inflation-pressures"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/53174","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=53174"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/53174\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/53175"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=53174"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=53174"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=53174"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}