Bank of England Chief Economist Huw Pill dampened expectations of an August interest rate cut on Wednesday as he focused on strong price pressures in Britain's economy and said the timing of such a move was an "open question".
Pill said services inflation and wage growth showed "uncomfortable strength", prompting investors to rein in bets on a rate cut on Aug. 1. Rate futures pointed to a 50% chance after his comments, down from 62% on Tuesday.
"I think it's still an open question on whether the timing for a rate cut is now"," Pill said in an unscripted conclusion of a speech to the Asia House think tank in London.
In the published text, Pill struck an equivocal tone on the evidence of inflation pressures in the economy. While citing the strength of domestic price growth, he added that the data suggested it had been contained.
"(They) may be starting to revert towards levels that are more consistent with the achievement of the inflation target," Pill said.
He said the BoE's "when-rather-than-if" characterisation of prospective Bank Rate cuts still seemed appropriate, but there was still work to do in dampening domestic price pressures.
Pill, who is seen as a centrist on the Monetary Policy Committee, voted with the majority of his colleagues last month to keep interest rates at a 16-year high of 5.25%.
On Monday, outgoing MPC member Jonathan Haskel said he was not yet ready to vote for rate cuts. Catherine Mann, another external MPC member, is due to speak at 1530 GMT.
