BoE's Pill will consider bigger rate rises if needed

LONDON, July 7 (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.
Reporting by David Milliken Editing by Peter Graff, Alexandra Hudson

Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.

All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.

Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.

We are using cookies to give you the best experience on our website. Read more or change your cookie settings.

Risk Warning: Your capital is at risk. Leveraged products may not be suitable for everyone. Please consider our Risk Disclosure.