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May 13 - 06:55 AM

GBP/USD - COMMENT-BoE Friction Over June Cut Adds To Sterling Intrigue

By Rob Howard  —  May 13 - 04:50 AM

The Bank of England's June interest rate decision could be one of the most dramatic for sterling in years, thanks to a fascinating sub-plot involving BoE Governor Andrew Bailey and Chief Economist Huw Pill.

Despite saying that a June rate reduction was not guaranteed, Bailey sounded like he was itching to cut rates when he spoke at the press conference following the BoE's sixth consecutive rate hold last Thursday.

By contrast, chief economist Pill appeared much less keen when he spoke on Friday, saying that betting too heavily on a June cut would be "ill advised".

The seeds of the apparent friction between the pair may have been sown last November, when Bailey pushed back against discussion of cutting rates two days after Pill said market pricing of a cut in August 2024 did not seem totally unreasonable to him.

If Bailey joins Dave Ramsden and Swati Dhingra in voting for a June rate cut while Pill votes against, he would need outgoing Deputy Governor Ben Broadbent and Deputy Governor for financial stability Sarah Breeden to join him to avoid being the first governor outvoted on rates since Mervyn King in June, 2007.

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Source:
Refinitiv IFR Research/Market Commentary

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