Interest rates cut could come in the summer, Bank of England’s Huw Pill hints | Personal Finance | Finance

The Bank of England’s chief economist has suggested that the Bank could consider cutting interest rates over the summer, if inflation continues to ease.

Huw Pill, speaking at an online event organised by the accountancy body ICAEW, said: “I think it’s not unreasonable to believe that through the summer we will begin to see enough confidence in the decline in persistence that bank rate will come into consideration.”

Bank governor Andrew Bailey said last week that a rate cut in June could not be “ruled out”, although he stressed it was not a “fait accompli”.

His comments came as the Bank held rates at 5.25 percent, keeping them at the highest level since 2008, but were widely seen as strengthening the case for a cut.

Two members of the Bank’s nine-strong Monetary Policy Committee (MPC) also voted for a cut to 5% in a sign of growing support for a reduction.

However, Mr Pill said the UK jobs market was still tight by historical standards, even though latest official data showed the unemployment rate rising to its highest for nearly a year, at 4.3 percent in the three months to March.

Regular pay growth has proved more stubborn, though, remaining unchanged at six percent, according to the ONS. While the majority of economists predicted a decrease to 5.9 percent, Mr Pill issued a cautionary note.

He emphasised there’s still “some way to go” in achieving and maintaining a two percent inflation aligned with the Bank’s target, considering the ongoing robustness of wage growth and the job market.

He revealed that the upcoming employment and inflation data would be carefully scrutinised prior to the Banks next decision on rates. The wages figure for April is significant as it incorporates the almost 10 percent increase in national living wage from the previous month.