BOE’s Chief Economist speaks about the necessity of a further rate increase

BOE’s Top Economist Huw Pill declared that the bank should increase the interest rate level more. It is necessary to curb the inflationary pressure which becomes more dependent on inner factors. 

Pill expressed this opinion on Wednesday during the Beesley Lecture which takes place in London. He supposes that many efforts are still required to fight inflationary pressure and normalize the monetary policy. Such actions are important because the bank was trying to adapt to the current situation for decades. 

Markets expect that the rate will be increased by half a point in December. According to forecasts from the Organization for Economic Cooperation and Development, by June 2023, the rate will rise to 4.5%.

Also, Pill repeated the BOE’s argument that the rate won’t be increased higher than 5%. It was this figure in which market prices stopped at the beginning of the month. However, the risk of strong inflation remains, and it may be affected by secondary factors. Further action will need to be taken for the mitigation of this risk.