Bank of England Chief Economist Huw Pill said that the process of easing monetary policy in the UK should be gradual. His comments contrast with yesterday's statements by Central Bank Governor Andrew Bailey, who signaled that the Central Bank could accelerate interest rate cuts if there is new good news on inflation.
"If the economic and inflation outlook is broadly in line with expectations, I would not rule out further monetary easing. However, caution is needed to avoid the risk of cutting rates too sharply or too quickly," Huw Pill said, adding that he prefers a gradual process of lowering rates.
Huw Pill also stated that the main reason for the weakness of British business investments was not high interest rates, but a high level of uncertainty after the global financial crisis of 2008, including due to Brexit, the COVID-19 pandemic and Russia's invasion of Ukraine.
Last month, the Organization for Economic Cooperation and Development (OECD) sharply upgraded its ranking for British economic growth this year and in 2025. The OECD predicts that GDP will grow by 1.1% in 2024 and 1.2% in 2025, up from previous forecasts of 0.4% and 1.0%. The OECD's broader global update to its forecasts now places Britain's growth rate close to most other G-7 countries this year and next.