London: The Bank of England (BoE) could lift interest rates without kickstarting a lengthy period of sharp increases, according to one of the most hawkish members of the Monetary Policy Committee (MPC).
Chief economist Huw Pill said last Thursday that a “prompt” hike would be appropriate to head-off the risk that the Iran energy shock causes price pressures to linger.
“Raising the bank rate on this basis need not be the start of a prolonged and aggressive series of increases,” he said in the text of a speech delivered at the Edinburgh Chamber of Commerce.
Pill – one of the MPC’s most prominent hawkish voices – was one of the three rate-setters who backed an immediate rate increase in July. The hawks, however, face a battle to co-opt at least two of the six members who’ve voted to hold since the start of the Middle East conflict.
While Pill said that he’s “uncomfortable” with the MPC’s “wait-and-see” approach, he signalled he would only back raising rates modestly to curb inflation – which rose to 2.9% in July.
Markets expect the BoE panel to leave rates unchanged at 3.75% at their next meeting on Sept 17, though they are fully pricing in a quarter-point hike by the end of the year. — Bloomberg
