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Britain will only feel the full impact of higher interest rates in late 2023 and there is unlikely to be any return of quantitative easing for at least a few years, Bank of England chief economist Huw Pill said on Wednesday.

Pill also defended the BoE’s exclusive power to set interest rates, which was questioned recently by supporters of British prime ministerial front-runner Liz Truss, who has promised to review the BoE’s mandate.

He rebuffed criticism that the BoE was too slow to act in response to surging inflation, pointing out that to have done so effectively would have meant raising rates in late 2020, at the height of the COVID-19 pandemic.

The BoE has hiked six times since December, and last week increased rates by the most in 27 years in an attempt to smother surging inflation, even as the central bank warned that a long recession is coming.

“The trouble is what we’ve done is only going to have an effect at the end of 2023,” Pill told an online audience at an event hosted by the BoE.

With markets pricing in a high chance that the BoE will cut rates next year to fight a recession, Pill said quantitative easing (QE) was unlikely to feature in future stimulus.

“I don’t really foresee that for the next few years at least,” Pill said.

Earlier this week, Deputy Governor Dave Ramsden told Reuters the BoE would press on with plans to sell its vast stock of British government bonds - the reverse of QE - even if an economic slowdown eventually forces it to cut rates.

Asked about the debate around central bank independence, Pill said rate-setters were able to take tough decisions on monetary policy, in contrast to governments that are driven by the political agenda.

“They have relatively short horizons,” Pill said. “It’s this independence from some of that political pressure that allows independent central banks to bring some of the bad news today, to recognize some of the challenges that we face today.”

Last week, Suella Braverman, a key Truss ally in the leadership race, said Truss’ review of the BoE’s mandate would look at its “entire exclusionary independence over interest rates.”

The BoE has been operationally independent of the government since 1997. Most economists are wary of diluting its power to set borrowing costs.

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