The Bank of England’s chief economist Huw Pill told CNBC today that the central bank is trying to get inflation under control without doing too much damage to the UK economy.
Pill explained: “What we are seeking to do, we’re always seeking to do, is to find that balance that gets us back to our 2% inflation target without generating unnecessary and costly problems in the real side of the economy."
“Creating that balance, signalling that balance, that was really our key message yesterday.”
The BoE yesterday increased interest rates by 75bp to 3% in an attempt to tame runaway inflation.
Pill suggested the price for reducing inflation was a slowing of economic growth.
“(The) slowdown in the economy is what we anticipate is required to contain domestic inflationary pressures to achieve our targets.”
He said that recent months have been turbulent.
“I think we’ve had a clearly quite disturbed period in the UK markets, in the UK political economy, in the UK economy over the last few months.
"(We’re) trying to re-anchor our own thinking in the more fundamental drivers ... I think we’re trying to re-anchor our communication,” he said.