BoE's Pill says job not done on inflation, rates might not fall again soon

LONDON (Reuters) -Bank of England Chief Economist Huw Pill said on Friday that the fight against high inflation was not won and there was no guarantee that interest rates would fall again soon.

"I think we can't be complacent, we can't declare 'job done' because there are some sort of dynamics in the UK economy, a sort of persistent component, that we need to be cautious about," Pill told an online presentation organised by the BoE.

"I think we shouldn't be yet promising that rates are going to move down further in the very short term," he said.

Pill voted against the BoE's decision to cut borrowing costs for the first time in more than four years which was announced on Thursday.

BoE Governor Andrew Bailey, who was part of the five-strong majority on the Monetary Policy Committee which backed the cut in Bank Rate, has also said the timing of further reductions in borrowing costs remains to be determined.

Investors are fully pricing another quarter-point reduction in Bank Rate - which now stands at 5.0% - in November.

Inflation in Britain has fallen from more than 11% in October 2022 to 2% in the most recent data, but wage growth and inflation in the services sector remain stronger, representing risks for price growth ahead.

In his comments on Friday, Pill said progress on tackling inflation was being made but Britain was "not out of the woods."

He also said he did not believe above-inflation increases in public sector pay announced by the government posed a big inflationary risk.

(Reporting by William Schomberg; Editing by Sachin Ravikumar)