Huw Pill, a member of the Monetary Policy Committee (MPC) that sets rates, opposed the 0.25 percentage point reduction to 4.25 per cent earlier this month.
Speaking at a Barclays briefing on Tuesday morning, he said: “My starting point is that the pace of bank rate reduction should be ‘cautious’, running slower than the 25 basis point per quarter we have implemented since last August.”
It is widely expected by experts that the Bank will cut three more times in 2025, meaning the cheapest mortgage rates could reach 3.5 per cent by the end of the year. There are currently several two and five-year fixed rates available for below 4 per cent.
Nick Mendes of brokers John Charcol said Pill’s remarks are a timely reminder that the Bank is not necessarily aligned with market expectations for rapid interest rate cuts.
“If he is correct, interest rates may not fall as quickly as previously forecast, and there is even a possibility they could edge even higher if inflation proves more stubborn than anticipated.
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The movement in swap rates, which underpin fixed mortgage pricing, has already begun to reflect this uncertainty.
The threat of trade tariffs seems to have eased, which has led to swap rates ticking up.As a result, several mortgage lenders, including TSB and Halifax, have increased their rates this week.
“The market is so competitive that there’s very little margin to play with, so mortgage rates do quickly feel any bumps in the outlook.
“Securing a deal gives peace of mind without preventing them from reviewing their choice if rates do keep dropping before they complete.”
He said that, while progress of inflation back down towards the 2 per cent target – from its current level of 2.6 per cent – was ongoing, “disinflationary momentum has shown signs of stuttering”.
Meanwhile, he was seeing renewed strength in business survey indicators, while household inflation expectations have picked up.
He continued: “In short, I remain concerned about upside risks to the achievement of the inflation target.”
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