The pound has strengthened after the Bank of England’s chief economist, Huw Pill, appeared to contradict Governor Andrew Bailey’s suggestion that policymakers might take a more “aggressive” approach to cutting interest rates.
Pill cautioned that there is “ample reason for caution” when evaluating how much inflation could rebound in the coming months. Inflation has risen to 2.2% after previously falling to the Bank of England’s 2% target in May and June.
Speaking at the Institute of Chartered Accountants in England and Wales Annual Conference, Pill stated, “While further cuts in Bank Rate remain likely if the economic and inflation outlook evolves as expected, it will be important to avoid the risk of cutting rates either too far or too fast.”
Following his comments, the pound rose 0.2% against the dollar to $1.315, recovering from a more than 1% drop on Thursday after Bailey hinted at a more “activist” policy stance.
The pound also gained 0.2% against the euro, which stands at 83.9p, after experiencing its worst performance against the euro since December 2022.
