BoE’s Pill will consider bigger rate rises if needed
2022.07.07 20:01
FILE PHOTO: FILE PHOTO: A general view shows the Bank of England and the and the Royal Exchange Building in London, Britain, December 17, 2020. REUTERS/Hannah McKay/File Photo
LONDON (Reuters) -Bank of England chief economist Huw Pill said on Thursday that he would consider a faster pace of interest rate rises to tackle “uncomfortably high” inflation, but only if needed to stop long-term price pressures from becoming entrenched.
Last month the BoE’s Monetary Policy Committee said it was ready to “if necessary act forcefully” to tackle inflation that it expects to exceed 11% later this year.
“At least on my part, this statement reflects a willingness – should circumstances require – to adopt a faster pace of tightening than we have seen implemented in this interest rate cycle so far,” Pill said in a speech at Sheffield Hallam University.
Financial markets see a 57% chance that the BoE will raise interest rates by half a percentage point at its next meeting in August – something the British central bank has never done since gaining operational independence in 1997.
Pill’s remarks were similar to those he made a day earlier at a central banking conference in London, where he said he would still prefer to take a “steady-handed” approach to raising rates if possible.
“The focus of attention will be on indications of more persistent inflationary pressures, which, in my view, places emphasis on potential second-round effects in price- and wage-setting behaviour,” Pill said on Thursday.
The MPC split 6-3 last month between a majority, including Pill, who voted for a quarter-point rise and a minority calling for rates to rise by half a percent.
Earlier on Thursday, MPC member Catherine Mann set out why she saw a case for faster rate rises.
