By Paul Hannon

The Bank of England is likely to make a "significant" change to its key interest rate in response to tax cuts recently outlined by the U.K. government when policymakers next meet in early November, its chief economist will say later Thursday.

"It is hard to avoid the conclusion that the fiscal easing announced last week will prompt a significant and necessary monetary policy response in November," Huw Pill will say, according to the text of a speech to be delivered later in Northern Ireland.

The government on Friday outlined a set of tax cuts that followed details of a cap on household and business energy prices that economists estimate may cost around GBP150 billion. Mr. Pill will say the tax cuts "provide a stimulus to demand". As such, they are likely to fuel inflation at a time when the central bank has been raising borrowing costs in an effort to tame very high inflation.

The central bank said Wednesday that it would restart its purchases of government bonds in order to prevent further sharp falls in their price. Mr. Pill will say this wasn't intended to have an impact on the central bank's monetary policy.

"Yesterday's intervention was not a monetary policy operation. These operations do not create central bank money on a lasting basis. They are not intended to cap or control longer-term interest rates," he will say.

Write to Paul Hannon at paul.hannon@wsj.com

(END) Dow Jones Newswires

September 29, 2022 12:10 ET (16:10 GMT)