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Bank of England economist says rates may need to rise to curb inflation

With UK inflation at 2.8% versus the 2% target, Huw Pill argues the economy’s “speed limit” is lower and tighter policy may be needed.

Reported · Written up by our desk · Economy

BBC Business reports that Huw Pill, the Bank of England’s chief economist, said interest rates may need to increase this year to keep rising prices under control.

Pill, a member of the Monetary Policy Committee that sets the BoE rate, pointed to the UK’s current inflation reading of 2.8% against a 2% target, and said the economy’s sustainable pace for running without reigniting inflation is lower than in past periods.

He also argued that slower productivity is weighing on the UK, noting it is particularly weak in Wales, where productivity is described as around 15% lower than the UK average, alongside lower wages and relatively high welfare claims.

Pill said improving efficiency, including through better infrastructure and an improved workforce, is key to lifting living standards, but he acknowledged delivering that in an uncertain environment is difficult given constrained public finances and the need for hard political decisions.

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