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The Bank of England’s chief economist is warning against complacency in the fight against inflation, after finding himself in a minority at this month’s BoE interest rate vote.
Huw Pill has told the Press Association that policymakers “should not be complacent” about the current rate of inflation, after the Consumer Prices Index (CPI) remained over the Bank’s 2% in May, at 2.8%.
Pill argued that in the past, inflation running around one percentage point above target would have been seen as “problematic”, adding:
double quotation mark“I think it should be seen as problematic, because our mandate is very clear; inflation at 2% at all times.”
“I do fear a little bit that, because we saw inflation go to 11%, policy discussion becomes, ‘oh inflation at 3% is not so bad’.”
Two week’s ago, the Bank’s monetary policy committee split 7-2 when it voted to leave borrowing costs on hold, with Pill and Megan Greene the lone voices for a hike in Bank rate.
Pill also appeared to criticise the six cuts in interest rate since August 2024, arguing that on balance monetary policy “hasn’t been restrictive enough over the last few years.”
City economists have been cutting their forecasts for UK interest rate rises in recent weeks, as tensions in the Middle East have cooled somewhat, and the oil price has fallen.
The City money markets are now only fully pricing in a rise in interest rates by next February – earlier this year, as many as three rises this year were priced in.
But the latest round of escalating strikes between Iran and the US last weekend has shown that the peace deal will not be easy to secure.
As Pill puts it:
double quotation mark“The world is becoming more uncertain and becoming more complex,” Mr Pill concluded.
“What we can guarantee is that monetary policy is not adding to uncertainty, and I think that is where we should keep the focus.”
The agenda
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9.30am BoE mortgage approvals and consumer credit data
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18.30pm BST: Christine Lagarde, president of the European Central Bank, gives speech at the ECB Forum on Central Banking 2026
