Bank of England still needs to ‘see the job through’ on inflation: Pill
2023.04.04 11:11
© Reuters. People walk outside the Bank of England in the City of London financial district in London, Britain, March 23, 2023. REUTERS/Henry Nicholls
By David Milliken
LONDON (Reuters) -Britain’s central bank still cannot be sure that it has raised interest rates enough to tame inflation, although significant past tightening should soon bear down on the economy, Bank of England Chief Economist Huw Pill said on Tuesday.
“On balance the onus remains on ensuring enough monetary tightening is delivered to ‘see the job through’ and sustainably return inflation to target,” Pill said in remarks published by the BoE, ahead of a speech he was due to deliver in Geneva.
Pill voted with the majority on the BoE’s Monetary Policy Committee last month to raise the BoE’s main interest rate to 4.25% from 4%, its 11th rate rise since starting to increase rates in December 2021.
Pill has spoken more about the potential persistence of high inflation than other MPC members and his rate view contrasts with that of colleague Silvana Tenreyro, who said earlier on Tuesday that the rapid pace of tightening meant that the BoE might have to cut rates “earlier and faster”.
Pill said he could not offer guidance on how he would vote at the BoE’s next rate decision on May 11.
Financial markets see a 70% chance of another quarter-point rate increase on that date.
“Although headline inflation is set to fall significantly in the course of this year owing to a combination of base effects and falls in energy prices, caution is still needed in assessing inflation prospects on account of the potential persistence of domestically generated inflation,” he said.
British consumer price inflation peaked at 11.1% in October, a 41-year high, and was still above 10% in February. The BoE forecasts it will fall sharply during the current quarter and that it will be below 4% by the end of this year.
