LONDON (Reuters) – The Bank of England (BoE) is likely to express a “significant” reaction to the massive tax and tax cuts announced last week by the British government but it is expected to wait until its next meeting in November before deciding. take the initiative, its chief economist, Huw Pill, said on Tuesday.
The presentation on Friday by Finance Minister Kwasi Kwarteng of a vast economic recovery plan without details of its financing aroused mistrust in the financial markets, which resulted in an acceleration of the fall of the pound sterling, Monday fell to an all-time low against the dollar, and by a surge in British government debt yields.
“It’s hard not to come to the conclusion that this will require a meaningful monetary policy response,” Huw Pill said at a monetary policy symposium in London.
Some investors and some economists believe that the central bank should meet urgently and announce a new marked increase in interest rates to counter the inflationary impact of the fall of the pound.
“I want to make it clear at this point that, from my point of view, the package of tax measures that have been announced to us will act as a stimulus,” added Huw Pill.
The BoE’s next monetary policy meeting is scheduled for Nov. 3 and while that date seems a long way off to some, central banks had better take “a more thoughtful, lower-frequency approach,” he said, adding that in the meantime, the BoE had the possibility of communicating its intentions.
(Report David Milliken and Marc Jones, French version Marc Angrand)
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