The Bank of England’s chief economist has indicated that he will vote to keep interest rates at their current 15-year high of 5.25% for an extended period rather than raising them much further.
Huw Pill told an audience at South Africa’s central bank that the BoE still had to “see the job through” and be vigilant with “stubbornly high inflation”, but pushed back against financial market expectations that this meant further interest rate rises.
In slides that the central bank did not publish, Pill compared possible paths for UK interest rates to the Matterhorn mountain in the Alps, with sharp rises and falls, and Table Mountain in South Africa, with a long period of rates around 5.25%, which the BoE considers to be depressing demand.
Pill said he “tend[ed] to favour the latter” path, resembling Table Mountain, with a “resolute profile [of interest rates] rather than a spike profile”.
But in a sign of his continued hawkish stance, Pill said the BoE’s emphasis was “still on ensuring we are sufficiently restrictive for sufficiently long to meet out target”, adding: “Core inflation remains stubbornly high and doesn’t show any obvious decline.”