Latest news with #HuwPill
Times
4 days ago
- Business
- Times
Interest rates dissenter warns of inflation risk
The UK economy could be facing another period of high and rising inflation, limiting the possibility of interest rate cuts this year, the chief economist of the Bank of England has warned. Huw Pill, a member of the monetary policy committee, said there was a risk that recent rises could lead to 'more persistent inflation' after the Bank said annual consumer price growth would peak at 4 per cent in September. Pill's comments are his first since he voted to keep interest rates unchanged at the Bank's August meeting, where there was a 5-4 vote to cut the base rate to 4 per cent — a two-year low and the fifth reduction in the past 12 months. The MPC's vote was far closer than expected and underlines growing worries inside the committee that inflation will remain stuck above the 2 per cent target. The Bank also raised its medium-term inflation forecast and does not expect the target to be hit until 2027. Pill said rising inflation and the risk that this could lead to higher pay increases and companies raising prices was 'where more of the dissenting members' focus' was. Stubborn inflation could mean the MPC may 'have to question whether the pace at which we're reducing Bank rate over the last year, at a pace of one quarter-point cut every quarter – is that sustainable?' Pill said. 'I think that's kind of where more of the dissenting members' focus was, the members of the committee who were voting ultimately to hold rates at 4.25 per cent yesterday.' Pill and Clare Lombardelli, the Bank's deputy governor for monetary policy, were the two permanent policymakers who did not want to cut interest rates, along with two external members, Catherine Mann and Megan Greene. Splits within the committee have led traders to cut back their bets on another interest rate cut this year. Andrew Bailey, the Bank governor, said rates would still be coming down but there was 'genuine uncertainty' about the future path of monetary policy in the face of rising prices. 'It remains important that we don't cut the Bank rate too quickly or by too much,' Bailey said. Investors expect borrowing costs to settle at 3.5 per cent by the middle of next year. Official figures are expected to show another acceleration in consumer prices in July, from 3.6 per cent to 3.7 per cent. Inflation has returned on the back of higher energy, food and services prices, but wages — a key measure of price pressures — are falling faster than the Bank expects. Data on second quarter GDP growth is also expected to show the economy fell flat between April and June after a strong start to the year.
Daily Mail
4 days ago
- Business
- Daily Mail
BoE economist: Interest rates may not fall as much as forecast as prices rise
Interest rates may not fall as quickly or as steeply as expected, Bank of England economist Huw Pill has warned on amid signs of resurgent inflation. The BoE's Monetary Policy Committee opted to cut base rate by 25 basis points to 4 per cent on Thursday, despite official forecasts suggesting inflation will rise to double the bank's target rate from next month. Huw Pill, who was one of four MPC members to vote for a pause, said on Friday the outlook for further rate cuts has become less certain. He told businesses in an online presentation: '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 has often been more hawkish than MPC peers, voting to keep rates on hold at each of the last four meetings and warning in May the bank was cutting too fast. The consumer price index rose to 3.6 per cent in June, while BoE forecasts suggest it will hit 4 per cent in September and not return to its 2 per cent target until the second quarter of 2027. Resurgent inflation has been linked to higher labour costs as a result of last year's Autumn Budget, but increased global food prices and a round of April consumer bills hikes - most notably in water - have also contributed. After Thursday's historic MPC meeting, markets are still pricing the potential for one more BoE cut of 25bps this year, bringing base to 3.75 per cent, but the move is not fully priced-in until the bank's February meeting. Base rate is then expected to settle at 3.5 per cent in the middle of next year. It comes after a flurry of disappointing data indicating weaker economic growth, an increasingly fragile jobs market and poor consumer confidence. Pill on Friday said MPC members were mulling whether above-target inflation was starting to become entrenched in businesses' price-setting and how wages are negotiated. He added: '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. '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 per cent yesterday.' Pill stressed the Bank will continue to act to sustainably bring down inflation but added that there is 'no set path' for interest rates. He said: 'Our mandate is that we will get inflation to 2 per cent, that's the target, on a sustainable rate. We will do whatever we need with the bank rate to do that 'They may be a bit lower than where we are but nothing is set.'
Powys County Times
4 days ago
- Business
- Powys County Times
Risk of ‘persistent inflation' could affect rate cuts, says Bank economist
The top economist at the Bank of England has warned there is an increased risk of 'persistent inflation' despite the central bank cutting interest rates. Huw Pill, chief economist at the Bank, stressed there has been 'progress' in bringing inflation down in recent months, in a briefing following the latest interest rate decision. It came a day after the Bank's rate-setting committee voted to reduce the base interest rate to 4% from 4.25% – its lowest level for more than two years. The Bank has used elevated interest rates in a bid to bring inflation sustainably down to the 2% target rate set by the Government, after inflation spiked in 2022. Latest figures from the Office for National Statistics (ONS) showed that UK CPI (consumer price index) inflation rose to 3.6% in June. On Thursday, the Bank said inflation is likely to rise to 4% in September before steadily falling and stabilising around 2% in 2027. In his briefing on Friday, Mr Pill indicated there could be more interest rate cuts but said heightened risks regarding inflation could affect this. He said: 'There is some shift in the balance of risks on inflation. There is a risk of spillover into more persistent inflation. 'When inflation is high due to external forces, we need to be aware of the risk they might affect domestic price-setting.' The Bank of England indicated that recent increases to the national minimum wage and National Insurance contributions had partly contributed to a recent uptick in food prices. Mr Pill stressed the Bank will continue to act to sustainably bring down inflation but added that there is 'no set path' for interest rates. He said: 'Our mandate is that we will get inflation to 2%, that's the target, on a sustainable rate. We will do whatever we need with the Bank rate to do that 'They may be a bit lower than where we are but nothing is set.'
Leader Live
4 days ago
- Business
- Leader Live
Risk of ‘persistent inflation' could affect rate cuts, says Bank economist
Huw Pill, chief economist at the Bank, stressed there has been 'progress' in bringing inflation down in recent months, in a briefing following the latest interest rate decision. It came a day after the Bank's rate-setting committee voted to reduce the base interest rate to 4% from 4.25% – its lowest level for more than two years. The Bank has used elevated interest rates in a bid to bring inflation sustainably down to the 2% target rate set by the Government, after inflation spiked in 2022. Latest figures from the Office for National Statistics (ONS) showed that UK CPI (consumer price index) inflation rose to 3.6% in June. On Thursday, the Bank said inflation is likely to rise to 4% in September before steadily falling and stabilising around 2% in 2027. In his briefing on Friday, Mr Pill indicated there could be more interest rate cuts but said heightened risks regarding inflation could affect this. He said: 'There is some shift in the balance of risks on inflation. There is a risk of spillover into more persistent inflation. 'When inflation is high due to external forces, we need to be aware of the risk they might affect domestic price-setting.' The Bank of England indicated that recent increases to the national minimum wage and National Insurance contributions had partly contributed to a recent uptick in food prices. Mr Pill stressed the Bank will continue to act to sustainably bring down inflation but added that there is 'no set path' for interest rates. He said: 'Our mandate is that we will get inflation to 2%, that's the target, on a sustainable rate. We will do whatever we need with the Bank rate to do that 'They may be a bit lower than where we are but nothing is set.' Financial markets are currently expecting one more rate cut this year, before another cut next year, with interest rates likely to stabilise close to 3.5%.
Glasgow Times
4 days ago
- Business
- Glasgow Times
Risk of ‘persistent inflation' could affect rate cuts, says Bank economist
Huw Pill, chief economist at the Bank, stressed there has been 'progress' in bringing inflation down in recent months, in a briefing following the latest interest rate decision. It came a day after the Bank's rate-setting committee voted to reduce the base interest rate to 4% from 4.25% – its lowest level for more than two years. The Bank has used elevated interest rates in a bid to bring inflation sustainably down to the 2% target rate set by the Government, after inflation spiked in 2022. Chief economist of the Bank of England Huw Pill said action is being taken to bring down inflation (Bank of England/PA) Latest figures from the Office for National Statistics (ONS) showed that UK CPI (consumer price index) inflation rose to 3.6% in June. On Thursday, the Bank said inflation is likely to rise to 4% in September before steadily falling and stabilising around 2% in 2027. In his briefing on Friday, Mr Pill indicated there could be more interest rate cuts but said heightened risks regarding inflation could affect this. He said: 'There is some shift in the balance of risks on inflation. There is a risk of spillover into more persistent inflation. 'When inflation is high due to external forces, we need to be aware of the risk they might affect domestic price-setting.' The Bank of England indicated that recent increases to the national minimum wage and National Insurance contributions had partly contributed to a recent uptick in food prices. Mr Pill stressed the Bank will continue to act to sustainably bring down inflation but added that there is 'no set path' for interest rates. He said: 'Our mandate is that we will get inflation to 2%, that's the target, on a sustainable rate. We will do whatever we need with the Bank rate to do that 'They may be a bit lower than where we are but nothing is set.' Financial markets are currently expecting one more rate cut this year, before another cut next year, with interest rates likely to stabilise close to 3.5%.
