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The Bank of England has been cutting interest rates too quickly, its chief economist has warned. Huw Pill said the pace of interest rate reductions since August last year has been ‘too rapid’ given the balance of risks to UK inflation. Speaking at an event held at Barclays in London, he said progress of ‘disinflation’ was partly a signal that easing monetary policy meaning rates coming down was working. ‘And in my view, that withdrawal of policy restriction has been running a little too fast of late, given the progress achieved thus far with returning inflation to target on a lasting basis.’ ‘I remain concerned about upside risks to the achievement of the inflation target,’ he added. Pill, who is a member of the Bank’s Monetary Policy Committee, MPC, was among the members to vote against cutting rates to 4.25%, instead preferring to leave them unchanged. The bank’s base rate has come down from a peak of 5.25%, when it was hiked to try to quell surging inflation across the UK. He said his vote to hold interest rates at this month’s policy meeting was more of a ‘skip’ than a ‘halt’ in rate cuts. This reflects his view that the ‘pace of bank rate reduction should be ’cautious’, running slower than the 25bp, basis points, per quarter we have implemented since last August’, the economist said. ‘That requires a ’skip’ in that quarterly pattern at some point. And I decided that the May meeting was an appropriate moment for that ’skip’.’ Meanwhile, Pill stressed that he was concerned about inflation persistence meaning price rises remaining elevated which would mean ‘you need to run the economy a little bit cooler’. ‘That’s an uncomfortable message, but it may be an important message for policymakers with inflation targets to normalise,’ he said. ‘I do worry about the fact that inflation has stayed stubbornly high, and pay dynamics have stayed stubbornly strong, even as activity has been relatively disappointing& over the last two to three years. ‘So that’s what I worry about& and I think that does influence the way I vote in the committee as an individual.’ By Anna Wise and Alex Daniel, PA Business Reporters Press Association: Finance source: PA Copyright 2025 Alliance News Ltd. All Rights Reserved.
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