July 24 2024: Bank of England Chief Economist Huw Pill stated earlier this month that it remains uncertain whether the BoE will cut interest rates on August 1, despite inflation returning to its 2% target, due to “uncomfortable strength” in underlying price pressures.
In June, the BoE’s Monetary Policy Committee (MPC) voted 7-2 to maintain interest rates at a 16-year high of 5.25%. Deputy Governor Dave Ramsden and external MPC member Swati Dhingra supported a cut to 5%.
Financial markets predict a roughly 45% chance that the BoE will lower rates to 5% at its next meeting, and anticipate just under 0.5 percentage points of rate cuts by the end of 2024, which is less than expected from the U.S. Federal Reserve.
Below is a summary of comments by MPC members since their last rate decision was published on June 20:
Huw Pill, Chief Economist
- July 10: “I think it’s still an open question on whether the timing for a rate cut is now.”
- “At annual rates still not far from 6%, annual services price inflation and wage growth continue to point to an uncomfortable strength in those underlying inflation dynamics.”
- “But the latest data also remains consistent with the view that these inflationary pressures have now been contained, and may be starting to revert towards levels that are more consistent with the achievement of the inflation target.”
Jonathan Haskel, External MPC Member
- July 8: “The labour market continues to be tight, and I worry it is still impaired.”
- “I would rather hold rates until there is more certainty that underlying inflationary pressures have subsided sustainably.”
Catherine Mann, External MPC Member
- July 10: “Until I see some deceleration, sustained deceleration in services (inflation), I really am not in a position (to vote for a rate cut).”
Swati Dhingra, External MPC Member
- July 15: “Now is the time to start normalising (interest rates) so we can then finally stop squeezing living standards the way we have been to try and get inflation down.”
- “I don’t see some kind of consumption boom and if we’re going to start moderating from the very high level of interest rate that we are at now … it is going to take some time for that to happen, for us to moderate it as well as for that to then feed into the real economy.”
