BoE’s Pill Sees Neutral Rate Around 2–4%, Urges Caution

Bank of England Chief Economist Huw Pill said policymakers believe the U.K.’s neutral interest rate now lies somewhere between 2% and 4%, but stressed that the estimate remains highly uncertain. Pill told an event on Friday that it is “too early” to give precise guidance on the level at which borrowing costs neither stimulate nor constrain growth, adding that officials must be cautious when drawing conclusions from models still adjusting to post-pandemic and geopolitical shocks. His remarks suggest the Monetary Policy Committee is reassessing the medium-term trajectory for rates after the most aggressive tightening cycle in decades, while signaling that any further adjustments will be guided by incoming data rather than a fixed target level.