© Reuters. FILE PHOTO: Chief Economist and Executive Director for Monetary Analysis and Research at the Bank of England, Huw Pill meets with reporters in the Reuters’ offices at Canary Wharf in London, Britain, September 5, 2023. REUTERS/Suzanne Plunkett/File Photo
By Howard Schneider and David Milliken
WASHINGTON (Reuters) -Bank of England chief economist Huw Pill said on Friday that so far he had seen only “quite modest and tentative evidence” that inflation would fall back to and stay at the central bank’s 2% target, due to strong underlying domestic price pressures.
“I do think that we will have to wait several more months before we can be convinced that the squeezing out of the persistent component of inflation is there,” Pill said at a panel discussion hosted by the United States’ National Association for Business Economics.
Pill was among the majority of members of the BoE’s Monetary Policy Committee who voted this month to keep interest rates at a near 16-year high of 5.25%.
Last week Pill said the debate around cutting rates looked more like a question of “when” rather than “if”.
Pill said Britain faced a “less benign” outlook than the United States, as wage growth and domestic services price inflation remained far above pre-pandemic levels despite a weak economy.
“Based on the data that I’ve described, I think getting to the point where we’re able to make that move (lower) in Bank Rate is still some way off,” Pill said.
Figures this week showing Britain’s economy had slipped into a mild recession in the second half of last year, while wage growth remained high, reinforced his concerns about bottlenecks in the labour market, Pill said.
The BoE forecasts inflation will fall from 4% last month to its 2% target in the second quarter of this year, but then will rise towards 3% at the end of 2024 as the disinflationary impact of lower prices fades.
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