Bank of England isn’t making promises on rates, Pill says

The Bank of England expects monetary policy will need to remain restrictive for an extended period, but it cannot make hard and fast promises on the outlook for interest rates, BoE Chief Economist Huw Pill said on Thursday.

“We need a persistent level of restriction over the next extended period … that’s not to say that’s a promise that we will deliver that type of interest rate profile,” Pill told the Institute of Chartered Accountants in England and Wales.

“There’s no promise here and we are responsive to events. And every time we meet, we look at all events. Events in the Middle East are a clear focus at the moment for reasons that I think are obvious,” he added.

Last week the BoE held its benchmark rate at a 15-year high of 5.25% and said it was not thinking about cutting it as it continued to focus on bringing down inflation which stood at 6.7% in September, more than three time’s the BoE’s 2% target.

Pill said on Monday market pricing pointing towards a first interest rate cut in August 2024 “doesn’t seem totally unreasonable”.