“British central bank was prepared to do more to get inflation back to target,” said Bank of England (BoE) Chief Economist Huw Pill on Monday per Reuters. The news also states that the BoE suggested last week that interest rates were approaching their peak.
Key comments
I do have a high degree of confidence (about getting inflation to target) because we know what we’re going to do.
We’ve done a lot to achieve it, we’re prepared to do more as necessary to ensure that we achieve it sustainably.
And I don’t think anyone is changing their mind or getting cold feet or anything like that.
BoE had to ‘guard against doing too much’ given the typical 18-month lag for rate hikes to impact the economy and the risk that it could push inflation too low.
We are reaching the point where those types of concerns are at the forefront of our minds.
But if you ask me where we are at the moment, I think we are still more concerned about the potential persistence of inflation.
Concern about inflationary pressure in the labor market ‘probably tilts us to saying we haven’t quite got to the point where we’re confident to engage in a discussion of a turning point in rates.’
Chances of inflation becoming more embedded in the UK is greater than continental Europe.
Also read: BoE’s Mann: Next step in bank rate is that it is more likely to be another hike
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