A person walks past the Bank of England in the City of London financial district in London, Britain, January 23, 2022. REUTERS/Henry Nicholls

LONDON, June 24 (Reuters) - Bank of England Chief Economist Huw Pill said on Friday that interest rates would remain the central bank's main monetary policy tool as it prepares to start selling bonds, reversing part of its economic stimulus push.

Pill said in a speech to Germany's Walter Eucken Institut that selling these assets, known as quantitative tightening (QT), would help to tighten monetary policy.

"But as long as we undertake any gilt sales programme in a gradual, predictable and well-communicated manner in a reasonably benign market environment, we can still use Bank Rate as the marginal instrument to achieve the inflation target over the medium term," he said.

The use of rates would depend on how QT influenced asset prices and the wider economic situation, Pill said.

The BoE began raising borrowing costs in December last year, increasing Bank Rate to 1.25% from a record low of 0.1% as inflation accelerated to a 40-year high of 9.1% in May.

The BoE is also working on a plan for selling assets from its stockpile of debt, mostly British government bonds, that reached almost 900 billion pounds ($1.11 trillion) in size before beginning to shrink as the bonds reached maturity.

The central bank's Monetary Policy Committee is due to consider the plan in August after which it could decide to start the asset sales.

Pill also said on Friday that the high level of inflation in Britain stemmed largely from external shocks, but there was a risk that higher headline inflation could lead to second-round effects in prices, wages and costs.

He said none of his comments represented a new assessment of the outlook for monetary policy and reiterated that the BoE was ready to "if necessary act forcefully".

Pill was part of the six-strong MPC majority which voted for a quarter-point increase in Bank Rate last week. Three other MPC members voted for a bigger, half-point increase.

(The story has been refiled to correct the spelling of tool in headline)

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The International Monetary Fund executive board said Friday it had concluded its fourth and fifth reviews for Ecuador's 27-month Extended Fund Facility (EFF), allowing for the immediate disbursement of about $1 billion.

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