On May 14, 2024, Huw Pill, the chief economist of the Bank of England, indicated that it might be feasible for the bank to consider a reduction in interest rates over the summer if inflation continues to decline. This statement was made during an online event hosted by the Institute of Chartered Accountants in England and Wales (ICAEW). Following his remarks, the value of the pound dropped by 0.2% against both the US dollar and the euro.

Bank of England Governor Andrew Bailey had previously mentioned that a rate cut in June was a possibility, though not guaranteed. Despite maintaining the interest rates at 5.25%—the highest since 2008—two of the nine members of the Monetary Policy Committee (MPC) voted for a reduction to 5%, signaling some support for a lower rate.

However, Pill highlighted the UK’s relatively tight job market and unflinching regular pay growth, which remained at 6%, contrary to expectations of a decrease to 5.9%. He noted that while there were positive signs, significant challenges remain in reducing and stabilizing inflation to meet the Bank’s 2% target. The Bank will closely analyze upcoming job and inflation data before making any further decisions on interest rates, taking into account recent wage changes, including last month’s near 10% increase in the national living wage.