Bank of England Economist Warns of Future Rate Hikes

Bank of England Chief Economist Huw Pill has stated that raising interest rates now may avoid more aggressive hikes in the future. In remarks prepared for delivery to the Edinburgh Chamber of Commerce on Thursday, Pill emphasized that a prompt increase in Bank Rate could 'head-off some of the potential insidious 'catch up' nominal dynamics that threaten to make temporary departures of inflation from target more persistent.'

Pill's comments come as the majority of Monetary Policy Committee members voted against raising interest rates in July. However, Pill and two other committee members supported the increase, citing concerns over long-term inflation pressures caused by the Iran war.

Pill noted that a well-executed and communicated rate hike 'need not be the start of a prolonged and aggressive series of increases.'