MNI BRIEF: Further Gradual Rate Cuts Most Likely - BOE Pill
MNI (LONDON) - The most likely outturn for the UK economy is one of continuing disinflation allowing gradaul rate cuts, Bank of England Chief Economist Huw Pill said at a briefing.
Pill has been towards the hawkish end of the MPC but he made clear that he is now on board with the MPC's baseline that monetary policy will need to stay restrictive but that Bank Rate can be lowered gradually. He declined to specify whether "gradual" indicates once-a-quarter rate cuts. The "process of disinflation is continuing, that's something to be welcomed," Pill said, adding that made the most likely policy response one of a "gradual reduction in Bank Rate."
Pill warned, however, that uncertainty was high citing geopolitical risks from the US and elsewhere and the MPC may have to change tack quickly. He said that the MPC needed to be "fleet-footed" as "the UK as a small open economy, is vulnerable ... to those types of global shocks ...And we do need to be aware that they can have very big effects on economic performance."