We might raise rates next instead of cutting them, says Bank economist

THE Bank of England may raise interest rates next instead of cutting them, its chief economist has said, in an apparent split with Andrew Bailey, the Governor.

Huw Pill warned that there are dangers from “developments in the Middle East for example, that if they were to become manifest we would need to respond to, and that would certainly alter my assessment of the speed or even the direction of future movements in rates”.

The comments come a day after Mr Bailey used a press conference and television interviews to suggest that the next rate move is likely to be down.

Mr Pill said that even if there is no escalation in the Middle East, the sustained pressure on inflation from wages, the jobs market and prices in the

‘That moment at which Bank Rate cuts might be possible is still some way off’

services industry means “that moment at which Bank Rate cuts might be possible is still some way off ”.

The Bank’s Monetary Policy Committee voted on Thursday to hold rates at 5.25pc and suggested that inflation would tumble to 2pc in April.

Mr Bailey on Thursday refused to be drawn on the timing of the first rate cut but did little to dampen expectations one was coming.

Speaking to Sky News, he said: “The decision, unless the world changes, and of course unfortunately the world does change and particularly at the moment, the next decision is more likely to be when do we cut.”

It came as rate cut expectations in the US were pushed back yesterday after non-farm employment soared by 353,000 in January, nearly double the consensus forecast of 180,000.