BoE’s Pill questions cut pace, says inflation risks may delay easing

BoE Chief Economist Huw Pill signaled that the central bank may need to reconsider its steady pace of easing if shifts in longer-term inflation dynamics persist. In a briefing to business leaders, Pill acknowledged that inflation pressures are likely to keep easing, but warned that price- and wage-setting behavior” may delay further policy easing.

“That might lead us to… question whether the pace at which we’re reducing Bank Rate… is sustainable,” he said, referencing the quarterly 25bps cut rhythm the BoE has maintained over the past year.

Pill’s comments help clarify the reasoning behind Thursday’s unexpectedly tight 5–4 policy vote, where he and three other members dissented against the 25bps cut to 4.00%. The majority, including Governor Andrew Bailey, favored continuing the easing path. But the split exposed growing concern within the Monetary Policy Committee over stickier inflation risks. Pill said the more hawkish voters are focused on upside risks driven by behavioral shifts rather than headline inflation itself.

Traders are now pushing back expectations for the next cut, with futures no longer fully pricing a 25bps move before February. Pill’s remarks reinforce the message that while policy is still on a downward path, the pace may slow if inflation proves more persistent beneath the surface.