LONDON—US tariffs are not likely to have a “dramatic” effect on Britain’s economy and the Bank of England should not neglect longer-term domestic pressures that might push up on inflation, BoE Chief Economist Huw Pill said on Friday.
Pill, who voted against Thursday’s quarter-point BoE rate cut, said he understood the BoE’s “gradual and careful” approach to future rate cuts as requiring it to be agile and alert to changes in the economy that might require a different approach.
“The analysis in the baseline forecast does not suggest that there’s a dramatic shift in the behaviour of the UK economy on the back of these trade announcements and trade uncertainties,” Pill said in a presentation to businesses.
On Thursday, the BoE said the impact of tariffs “should not be overstated” and was likely to lead to a 0.3 percent hit to the size of Britain’s economy over three years and reduce inflation by 0.2 percentage points in two years’ time.
