In an online event overnight, BoE Chief Economist Huw Pill acknowledged the slower pace of reduction compared to global counterparts. The UK has also seen inflation climbed higher. Despite this lag, he expressed confidence that “We’re going to see the UK get down to levels more comparable to what we’re seeing in the rest of the world.”
Pill’s remarks came amid the backdrop of market expectations that have priced in a potential rate cut as early as August 2024. He finds this timing “not totally unreasonable,” highlighting it’s a period when the Bank might reassess its stance, albeit with the usual caveat that economic conditions are fluid and subject to change.
Moreover, Pill tempered expectations of a return to the ultra-low interest rate environment seen pre-pandemic, indicating that future rates are more likely to find a middle ground. This perspective reinforces the notion that the era of zero interest rates was an anomaly rather than a standard monetary condition.