Most brokers dismissive of BoE economist’s rate-cut warning

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The vast majority of mortgage intermediaries have rejected the Bank of England chief economist Huw Pill’s suggestion that interest rates are falling too quickly, according to new polling from specialist lender Landbay.

In a survey conducted in June, Landbay asked brokers whether they agreed with Pill’s recent claim that rates were coming down “too fast.” Just 13% said they supported his view, while 82% said they did not. The remaining 5% were unsure.

The results highlight a striking divide between market sentiment and the caution voiced by Pill, who joined the Bank as chief economist in 2021 and also sits on the Monetary Policy Committee.

Speaking at a recent conference hosted by the London School of Economics, Pill warned that inflationary pressures in the UK could prove more persistent than currently forecast, implying that the Bank may need to take a more forceful or sustained approach to monetary tightening than investors expect.

Unhappy: Pill

He reiterated concerns that Britain may face structural inflation challenges akin to those seen in the 1970s and 1980s, citing changes in wage and price-setting behaviour.

While the Bank’s central forecast points to inflation returning to its 2% target by early 2027, Pill stressed that this projection should not be interpreted as an endorsement of market expectations for a smooth path of rate cuts.

“I remain concerned that we have seen a sort of structural change in price and wage-setting behaviour,” he said.

“Maybe driven by the type of things that were involved in models of the inflation process from the ’70s and ’80s.”

Pill opposed the MPC’s quarter-point cut in May, which brought the base rate down to 4.25%, and has urged a pause in further reductions. Rather than halting the overall path of monetary easing, he has argued for a “skip” this quarter to allow policymakers more time to assess underlying economic conditions.

Rob Stanton, sales and distribution director at Landbay, said: “Huw Pill has been a consistent voice of caution while the central bank has been making rate reductions. He’s not alone: both he and Catherine Mann have advocated for rates to be held recently.

“While intermediaries clearly don’t hold with his views, the brokers we have polled are not outliers: the majority of the MPC opted for a quarter-point reduction in rates to 4.25% recently – and there’s a cohort of the MPC calling for a sharper, half-point cut in rates given weak economic growth and dangers, including the global trade conflict.”

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