{"id":473896,"date":"2026-02-14T06:00:07","date_gmt":"2026-02-14T06:00:07","guid":{"rendered":"https:\/\/www.newsbeep.com\/ca\/473896\/"},"modified":"2026-02-14T06:00:07","modified_gmt":"2026-02-14T06:00:07","slug":"boe-chief-economist-urges-caution-before-further-rate-cuts","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/ca\/473896\/","title":{"rendered":"BoE chief economist urges \u2018caution\u2019 before further rate cuts"},"content":{"rendered":"

Stay informed with free updates<\/p>\n

Simply sign up to the UK interest rates myFT Digest — delivered directly to your inbox.<\/p>\n

High interest rates are not the reason for \u201clacklustre\u201d UK growth, the Bank of England\u2019s chief economist said on Friday as he pushed back against calls for cuts from more dovish voices on the Monetary Policy Committee. <\/p>\n

Huw Pill, speaking at an event hosted by Santander in London, said the BoE<\/a> had cut interest rates too fast over the past two years and needed to take a more cautious approach to bring inflation durably back to target. <\/p>\n

After stripping out the effect of Budget measures to hold down household energy bills, \u201cunderlying\u201d inflation would be running at 2.5 per cent in the middle of the year, rather than the 2 per cent the BoE targets.\u00a0<\/p>\n

This suggested the MPC had been \u201cinsufficiently cautious\u201d in cutting rates from 5.25 per cent in 2024 to 3.75 per cent in December, Pill said, and should now keep them on hold for longer.<\/p>\n

\u201cProgress with disinflation is ongoing but it\u2019s not quite as rapid or as convincing as we might have hoped 18 months ago,\u201d he said, adding that this was \u201ca call for caution rather than a call for reversal\u201d. <\/p>\n

Pill, who has consistently been on the more hawkish side of a split MPC, was speaking a week after the committee voted by a narrow margin to keep rates on hold, with some members in favour of a cut. <\/p>\n

The dovish tone of the BoE\u2019s communications helped convince traders that the central bank was preparing to cut rates again in March or April, with markets now pricing in a two-thirds chance of a move next month. <\/p>\n

\"HuwHuw Pill: \u2018Progress with disinflation is ongoing but it\u2019s not quite as rapid or as convincing as we might have hoped 18 months ago\u2019 \u00a9 Graeme Sloan\/Bloomberg<\/p>\n

Some MPC members argued that wage pressures that had fuelled inflation in recent years would soon ease, against a backdrop of rising unemployment, and that the Budget<\/a> measures would help because households would see lower bills and be less likely to press for pay increases.<\/p>\n

But Pill said that while economic growth was \u201cnot very dynamic\u201d, there was no sign of any collapse in activity. Official figures this week showed the economy grew 0.1 per cent in the final quarter of 2025.<\/p>\n

He said that, during a recent visit to meet business owners in the Midlands: \u201cI didn\u2019t talk to people who felt we were on the cusp of a sharp downturn,\u201d and \u201cthey did not point to interest rates as a constraint on activity\u201d.<\/p>\n

Chancellor Rachel Reeves, in her November Budget, announced a freezing of rail fares in 2026 and cuts to energy bills, as part of a package of policies intended to \u201ccut the cost of living\u201d and \u201cbring down inflation\u201d.<\/p>\n

But Pill said that, while Reeves\u2019 decisions would bring headline inflation down to 2 per cent in the short term, there was \u201ca sort of special measures element of that\u201d and it was an \u201copen question\u201d whether the fiscal measures would have any longer-term effect.<\/p>\n","protected":false},"excerpt":{"rendered":"Stay informed with free updates Simply sign up to the UK interest rates myFT Digest — delivered directly…\n","protected":false},"author":2,"featured_media":473897,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[45,49,48,46],"class_list":["post-473896","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-business","tag-ca","tag-canada","tag-economy"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/473896","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/comments?post=473896"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/473896\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media\/473897"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media?parent=473896"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/categories?post=473896"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/tags?post=473896"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}