In reply to a questionnaire by the Treasury Select Committee, BoE policymaker Huw Pill said he expected interest rates to “remain at relatively low levels for the coming years, even as the impact of the COVID-19 pandemic recede.”
But he acknowledged that “balance of risks is currently shifting towards great concerns about the inflation outlook.” Also, “current strength of inflation looks set to prove more long lasting than originally anticipated.” He emphasized that “risks to the economic and inflation outlook are again clearly becoming two-sided”.
On BoE’s balance sheet, Pill said, “at a time when financial markets appear to be functioning normally, a gradual and predictable reduction in the stock of asset purchases can be achieved without disrupting markets and/or creating an undesired abrupt tightening of financial and monetary conditions”.
