Huw Pill, the Bank of England's chief economist, expressed concerns about the rapid pace of recent interest rate cuts amidst rising wages that could stoke inflation. He advocated for a pause in cuts, emphasizing the need for caution in monetary policy. Despite voting to maintain the current rate during a committee meeting, he highlighted that a downward trajectory for interest rates is still anticipated. Financial markets project further cuts to stimulate the economy, facing weak growth and increasing unemployment.
Huw Pill cautioned against rapid interest rate cuts amid strong pay increases, suggesting a pause in policymaking to prevent fueling inflation.
Despite a favored downward interest rate path, Pill's May vote indicated a preference for caution while technically continuing the withdrawal of restrictions.
The Bank of England expects underlying growth to slow to just 0.1% per quarter, with the economy growing at 0.7% in the first quarter.
With rising taxes and global uncertainties, UK employers have started laying off workers, reflecting the economy's fragility despite a recent growth spike.
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