BOE's Pill Sees Need for Caution in Cutting Key Rate

By Paul Hannon

The Bank of England should proceed cautiously in lowering borrowing costs as inflation cools, Chief Economist Huw Pill said Friday.

In a speech, Pill said inflation would only decline if the central bank continued to restrain households and businesses through its key interest rate.

"While further cuts in [the] bank rate remain in prospect should the economic and inflation outlook evolve broadly as expected, it will be important to guard against the risk of cutting rates either too far or too fast," Pill said.

Pill's comments follow an interview with BOE Gov. Andrew Bailey published by the Guardian newspaper Thursday in which he said more "aggressive" cuts are possible if inflation continues to cool.

Pill was one of the four rate-setters who voted against the BOE's first, and to date only, cut in August. Megan Greene, who voted with Pill, said in a recent speech that she now supports "a gradual approach to removing restrictiveness."

Write to Paul Hannon at paul.hannon@wsj.com

(END) Dow Jones Newswires

October 04, 2024 04:25 ET (08:25 GMT)

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