Nov 13 2024 3 mins
Bank of England Chief Economist Huw Pill believes the Bank still has work to do to tame inflation. Despite voting for a cut in the base rate last week, Pill spoke of his concern that the October employment report published yesterday showed that inflation pressures are still too high to stay at the Bank's two per cent target consistently.
""As we saw in the labour market data, pay growth remains quite sticky at elevated levels and levels that, given the outlook for productivity growth in the UK, are hard to reconcile with the UK inflation target,"" Pill said at a conference organized by Swiss bank UBS.
His boss, Bank of England Governor, Andrew Bailey, said after last week’s MPC meeting that even though the Bank has only cut rates twice since 2020, he expects that any future cuts will be gradual as it assessed the persistence of inflation pressures including from the first budget of Britain's new government.
Pill said Britain might be behind other economies in working its way through the impact of the pandemic and other shocks in recent years, which could help to explain why investors are pricing higher UK interest rates than elsewhere.
Although the Bank does not base its case on the assumption that the UK needs higher interest rates to combat inflationary pressures, that possibility must be considered.
Beyond Currency Market Commentary:
Aims to provide deep insights into the political and economic events worldwide that can cause currencies to change and how this can affect your FX Exposure.
""As we saw in the labour market data, pay growth remains quite sticky at elevated levels and levels that, given the outlook for productivity growth in the UK, are hard to reconcile with the UK inflation target,"" Pill said at a conference organized by Swiss bank UBS.
His boss, Bank of England Governor, Andrew Bailey, said after last week’s MPC meeting that even though the Bank has only cut rates twice since 2020, he expects that any future cuts will be gradual as it assessed the persistence of inflation pressures including from the first budget of Britain's new government.
Pill said Britain might be behind other economies in working its way through the impact of the pandemic and other shocks in recent years, which could help to explain why investors are pricing higher UK interest rates than elsewhere.
Although the Bank does not base its case on the assumption that the UK needs higher interest rates to combat inflationary pressures, that possibility must be considered.
Beyond Currency Market Commentary:
Aims to provide deep insights into the political and economic events worldwide that can cause currencies to change and how this can affect your FX Exposure.