We now need cautious cuts

Bank of England (BoE) Chief Economist Huw Pill commented on the policy outlook in his scheduled speech on Tuesday.

Key quotes

• Vote against interest rate cut was a ‘skip’ within a continuing withdrawal of monetary policy restriction.
• Inflation pressure indicators give me cause for concern.
• Quarterly pace of 25 bps cuts seen since last summer is too rapid given the inflation outlook.
• My dissenting vote was favouring a ‘skip’ in the quarterly pattern of bank rate cuts.
• It should not be seen as favouring a halt to withdrawal of restriction.
• Structural changes in price and wage setting behaviour have increased the intrinsic persistence of the UK inflation process.
• Pace of quarterly cuts too rapid given the balance of risks to price stability we face.
• Believe that the underlying disinflation process remains intact.
• Prospective path of bank rate from here is downward.
• My dissent from that decision does not reflect a fundamental difference with the committee majority.
• We now need cautious cuts.
• We should not be dependent on how data turns out.
• We can’t assume that inflation pain of new economic shocks will go away.
• I agree with the MPC view that there is an easing in the labour market, question is about the pace.
• Some key pay indicators remain quite strong.

Market reaction

GBP/USD is holding its retreat from near 1.3400, adding 0.08% on the day to trade at 1.3373, as of writing.