BOE Says UK Government Tax Cuts Will Prompt 'Significant' Change to Key Interest Rate -- WSJ
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
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
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 email@example.com
(END) Dow Jones Newswires
September 29, 2022 12:10 ET (16:10 GMT)
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