Huw Pill dashes interest rate hopes

Huw Pill dashes interest rate hopes

INTEREST RATE: No cut yet, Bank of England says Photo credit: Flickr/Geoff Henson

Britain’s FTSE 100 index reached a record high of 8,076 points early on Tuesday April 23 as hopes grew of cuts in the interest rate.

This overtook the previous day’s 8,023 and outstripped February 20023’s record 8,0476 points.

The City was counting on two interest rate reductions this year, with the first announced in August after Sir Dave Ramsden, deputy governor of the Bank of England (BoE), foresaw that UK inflation would fall lower than had been anticipated over the next three years.  It was on course to remain close to the BoE’s target of 2 per cent with headline – or total – inflation currently standing at 3.2 per cent, Sir Dave said.

So far, so good until Huw Pill, the BE’s Chief Economist and executive director for Monetary Analysis and Research, announced soon after mid-day on April 23 that interest cuts were still “some way off” but added that a reduction was nevertheless “somewhat closer” than it had been in March.

The FTSE 100 immediately lost its earlier gains, levelling off with the same 8,023 points that it closed with on April 22 but nevertheless ended the day at 8,044.

Pill argued that conditions had not changed much in recent weeks and although it looked as though inflation would fall to 2 per cent or lower, it was also possible that the inflation rate could rise once more.

“In my view there are greater risks associated with easing too earl, should inflation persist, rather than easing too late should inflation abate,” Pill said.

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Written by

Linda Hall

Originally from the UK, Linda is based in Valenca and is a reporter for The Euro Weekly News covering local news. Got a news story you want to share? Then get in touch at