Bank of England’s Pill says ground is prepared for rate hike

Bank of England chief economist Huw Pill said the way was clear for the British central bank to follow through on its plan to raise interest rates for the first time since the coronavirus pandemic hammered the world economy last year.

“In my view, the ground has now been prepared for policy action,” Pill said in the text of a speech to the Confederation of British Industry on Friday.

While avoiding any signal on the likelihood of the BoE increasing borrowing costs at its December meeting, Pill said recent economic data showed Britain’s economic recovery after its pandemic slump was continuing, supply chain problems were creating inflationary pressure and the labour market was tight.

That meant he supported the BoE’s steer earlier this month that rates would have to go up over “coming months”.

“In other words, given where we stand in terms of data and analysis, I view the likely direction of travel for monetary policy from here as pretty clear,” Pill said.

But he said there was still uncertainty about the economic picture and therefore the BoE could not give precise guarantees on what it will do with rates.

The BoE sent shockwaves through financial markets on Nov. 4 when it kept Bank Rate at its record low 0.1%. Investors had interpreted comments from Governor Andrew Bailey in late October as signalling that a November rate hike was on the way.

Pill, along with Bailey, was among the seven members of the BoE’s nine-strong Monetary Policy Committee who voted for no change on Bank Rate this month.

Bank of England’s Pill says ground is prepared for rate hike