By David Milliken and Andy Bruce
LONDON (Reuters) -Bank of England Chief Economist Huw Pill said on Tuesday that interest rate cuts remained some way off, even if the passage of time and an absence of bad news on inflation had brought them closer.
Pill said there were greater risks from cutting the Bank Rate too quickly, rather than too late - a view that grounded his cautious approach to policy, despite signs of a reduction in inflation pressures.
Investors reduced their bets that the BoE will cut rates in the coming months as Pill spoke, with the central bank's August meeting no longer fully priced in as the starting point.
"The combination of little news and the passage of time have brought a Bank Rate cut somewhat closer," Pill said in a speech at the London campus of the University of Chicago Booth School of Business.
"But the same lack of news gives me no reason to depart from the baseline that I already established," Pill added, saying that he stuck with his view in a March 1 speech that "the time for cutting Bank Rate remained some way off".
Pill, seen as a centrist on the Monetary Policy Committee, declined to comment on whether markets were right to be focused on an August rate cut, and said it was right to maintain a restrictive stance for interest rates.
Business surveys published on Tuesday supported his existing view of the economy.
"Economic growth in the UK has resumed, albeit at a modest rate, over the past few months following the technical recession we experienced in the second half of last year. And today's survey data ... certainly supports that view," Pill said.
Although inflation looks set to fall below the BoE's 2% target in the coming months, Pill warned against getting "too excited" about this, given it would likely rise again as the year progresses.
Markets had previously bet on slightly earlier BoE rate cuts after Deputy Governor Dave Ramsden said last week he thought inflation might hold at 2% rather than rise.
Pill described a range of around 3-4% for services inflation and wage growth as compatible with the 2% target, compared with rates of around 6% presently.
Problems with the Office for National Statistics' labour force survey meant the BoE could not place as much weight on unemployment and employment numbers as he would like, Pill said. Last week's sharp fall in official employment numbers looked at odds with private sector surveys, he added.
Earlier on Wednesday, rate-setter Jonathan Haskel said more slack in Britain's labour market was needed to be confident that inflation will stay at 2%.
Pill said the BoE could move policy independently of the U.S. Federal Reserve and the European Central Bank, the latter of which looks likely to cut interest rates in June.
He also welcomed the findings of former Fed chair Ben Bernanke's report into the BoE's forecasting processes.
"But I want to caution against expectations that the Bernanke report will lead to a rapid change in how UK monetary policy is presented," Pill said.