Bank of England chief economist Huw Pill said interest rate cuts were a matter of ‘when, rather than if’ but said it remained an ‘open question’ whether it should act now.
In London yesterday, Pill said underlying signs of inflation pressure showed ‘uncomfortable strength’ despite inflation falling to its 2 per cent target.
And in a separate speech, fellow Bank rate-setter Catherine Mann also emphasised the strength of price pressures in the economy.
Caution: Bank of England chief economist Huw Pill said underlying signs of inflation pressure showed ‘uncomfortable strength’ despite headline inflation falling to its 2% target
The remarks dampened market bets that the Bank will cut interest rates at its meeting on August 1.
Traders last night saw a 50/50 chance of such a move, down from 60/40 the day before.
And the pound climbed above $1.28 against the US dollar – its highest in a month.
Falling inflation has buoyed hopes that the Bank will soon cut rates, currently at 5.25 per cent, the highest level since 2008.
Pill said: ‘In the absence of any big new shocks, the “when rather than if” characterisation of prospective Bank rate cuts still seems appropriate.’
He pointed out that, on the one hand, inflation in the services sector and wage price growth remained high – but added that, on the other hand, there was evidence that inflationary pressures ‘have now been contained’.
But Pill added: ‘I think it’s still an open question on whether the timing for a rate cut is now.’
DIY INVESTING PLATFORMS
AJ Bell
AJ Bell
Easy investing and ready-made portfolios
Hargreaves Lansdown
Hargreaves Lansdown
Free fund dealing and investment ideas
interactive investor
interactive investor
Flat-fee investing from £4.99 per month
eToro
eToro
Share investing: 30+ million community
Trading 212
Trading 212
Free share dealing and no account fee
Affiliate links: If you take out a product This is Money may earn a commission. These deals are chosen by our editorial team, as we think they are worth highlighting. This does not affect our editorial independence.
Compare the best investing account for you
***
Read more at DailyMail.co.uk