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BoE chief economist backs Bank Rate hike to 4% amid Middle East risks

Huw Pill said waiting for uncertainty around the Middle East conflict and energy prices to clear could risk inflation spreading into wages and domestic prices.

Reported · Written up by our desk · Central Banks

Bank of England Chief Economist Huw Pill reiterated his support for raising the Bank Rate to 4%, arguing that policymakers should not delay action while uncertainty tied to the Middle East conflict and energy prices persists, according to FXStreet.

Pill warned that postponing a rate increase could leave monetary policy “behind the curve,” and that higher energy costs may spread into wages and domestic prices.

FXStreet also noted the BoE’s stated approach to achieving price stability, defined as keeping inflation around a 2% target, using changes to base lending rates that influence overall interest rates and the value of the pound.

The outlet added that FX changes can be affected by the BoE’s stance, since higher rates generally make the UK more attractive for global investors, while QE is typically associated with a weaker pound.

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