BoE Chief Economist Huw Pill highlighted today that the existing policy rate, deemed restrictive, is sufficient to dampen inflationary pressures without necessitating further hikes.
“Having established monetary policy in restrictive territory, it’s not the case that we need to raise rates in order to bear down on inflation,” he said in a speech to the Institute of Chartered Accountants in England and Wales.
“Sustaining rates at their current restrictive level will continue to bear down on inflation,” he affirmed “It is that maintaining of the restrictive stance that is key to achieving the inflation target.”
Pill also acknowledged the role of global economic developments in the inflation outlook but was keen to point out the influence of BoE’s actions. “That tightening of monetary policy is bearing down on inflation and contributing to this decline,” he stated.
Despite these measures, Pill expressed caution, noting that inflation, especially in the service sector, has displayed more tenacity than anticipated, without a “decisive turning point” in sight.
Moreover, wage growth is proving to be more persistent, signaling that it may take longer to align with the 2% inflation target than previously projected by models.
