BoE’s Pill Signals Further Rate Hikes

The Bank of England is pondering further raise interest rates due to concerns that inflation could become woven into the British economic activities, despite the growing risks of a prolonged recession according to BoE’s chief economist Huw Pill.

Pill noted that there was “still more to do” to tackle soaring inflation after the central bank raised interest rates to 3% last week with the biggest single rise in borrowing costs since 1989.

BoE’s monetary policy committee (MPC) would use its next meeting in December to push interest rates higher, he said: “I think there is more to do. We’ve done some, that’s what we did last week. And there’s still more to do.”

The Bank’s chief economist said there was a danger that a “self-sustaining” inflationary cycle could take hold whereby businesses continue to raise their prices to accommodate higher wage settlements for their workers long after pressure from soaring energy costs disappear.