Pill: Higher Interest Rates to Help Tame Inflation Pressure

Bank of England Chief Economist Huw Pill stated that raising interest rates would help mitigate inflation pressure. He argued that implementing an increase in Bank Rate promptly could prevent 'catch up' nominal dynamics from becoming persistent.

Pill emphasized that this move need not be the start of a prolonged and aggressive series of rate hikes. However, he noted that investors have priced in only a 15% chance of a quarter-point rate hike at the next Monetary Policy Committee meeting.

This comes as the Bank of England awaits clearer signs of what the Iran war means for long-term inflation pressures. Pill's comments were made ahead of his address to the Edinburgh Chamber of Commerce, where he would further elaborate on this topic.