(Bloomberg) --

Bank of England Chief Economist Huw Pill said the central bank will need to mount a “significant and necessary” response to government tax cuts, and the market rout that followed their announcement, when policymakers next meet in November.

In a speech to be delivered tonight, Pill will reiterate a signal made earlier this week that the BOE was unlikely to unveil an inter-meeting interest-rate hike to quell the turmoil. Still, the fiscal easing, and the repricing of UK assets, will need to be met with rates, he said.

Money markets eased bets on an emergency rate hike after the speech, pricing less than 10 basis points of increases within the next week, according to swaps. They see around 150 basis points of hikes in November, down from a peak of almost 190 basis points earlier Thursday.

“Taken in conjunction with the macroeconomic impact of ensuing market developments, it is hard to avoid the conclusion that the fiscal easing announced last week will prompt a significant and necessary monetary policy response in November,” Pill will say in Belfast, according to a text released by the BOE.

The comments come after the bank launched an emergency program of bond purchases to help prevent a gilt rout that threatened pension funds. Pill stressed that intervention was made for stability reasons, not to control market rates.

“These operations do not create central bank money on a lasting basis,” he said. “As a result they will not shift the underlying macro economically-relevant monetary trends in the economy, which ultimately pin down developments in the price level”

“They are not intended to cap or control longer-term interest rates or to offer more favorable underlying financing conditions to the institutions involved -– or, for that matter, to the government -– than would have prevailed in an orderly market environment.”

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