Landbay Poll: 82% of brokers reject chief economist’s rate cut concerns
Only one in eight brokers think interest rates are falling too fast, according to polling conducted by Landbay.
The specialist buy-to-let lender asked mortgage intermediaries, “Do you agree with Huw Pill, the Bank of England’s chief economist, that interest rates are falling ‘too fast’?”
Only 13% said they agreed with Pill – who took over as the Bank of England’s chief economist from Andy Haldane in 2021.
But roughly five in every six brokers (82%) said they did not agree with Pill (5% said they weren’t sure).
Pill has warned the Bank of England has been cutting rates too quickly, and argued its policymakers should have held the level unchanged given inflationary persistence.
He is also an executive director for monetary analysis and research and a member of the Monetary Policy Committee.
At a conference organised by the London School of Economics recently, Pill admitted he was worried inflation in Britain could prove stronger than expected and that interest rates might need to stay higher than investors are thinking. He said inflation might be hard to get back to the Bank of England’s 2% target, which might “mean that the response of monetary policy, in order to ensure that we get back to our target within a reasonable cycle, needs to be somewhat more aggressive or more persistent in itself.”
Pill said investors should not assume that the BoE’s latest forecast – that inflation would get back to target by early 2027 based on recent market pricing – was a direct endorsement of their bets on future rate cuts. He also suggested there were echoes of past inflation crises in the rise in wage demands triggered by the jump in prices over the past few years.
“I remain concerned that we have seen a sort of structural change in price and wage-setting behaviour, maybe driven by the type of things that were involved in models of the inflation process from the ’70s and ’80s,” he said.
Having opposed the quarter-point reduction in May to 4.25%, Pill has advocated policymakers “skip” reducing rates this quarter rather than “halting” the process of lowering the level altogether.
Rob Stanton, sales and distribution director at Landbay, said: “Huw Pill has been a consistent voice of caution while the central bank has been making rate reductions. He’s not alone: both he and Catherine Mann have advocated for rates to be held recently.
“While intermediaries clearly don’t hold with his views, the brokers we have polled are not outliers: the majority of the MPC opted for a quarter-point reduction in rates to 4.25% recently – and there’s a cohort of the MPC calling for a sharper, half-point cut in rates given weak economic growth and dangers, including the global trade conflict.”
Landbay polled the views of 80 brokers in June via email and LinkedIn.