Finance
Bank of England's Pill says interest rates might need to stay high
Published by Global Banking & Finance Review®
Posted on May 13, 2025
2 min readLast updated: January 23, 2026
Global Banking & Finance Review®
Company
Published by Global Banking & Finance Review®
Posted on May 13, 2025
2 min readLast updated: January 23, 2026
BoE's Huw Pill warns that UK interest rates may need to remain high due to persistent inflation, challenging the central bank's 2% target.
LONDON (Reuters) -Bank of England Chief Economist Huw Pill said on Tuesday that he was worried that inflation in Britain could prove stronger than expected by the central bank and interest rates might need to stay higher than investors are thinking.
Pill said inflation might be hard to get back to the BoE's 2% target which might "mean that the response of monetary policy, in order to ensure that we get back to our target within a reasonable cycle, needs to be somewhat more aggressive or more persistent in itself."
Last week, Pill voted against the BoE's quarter-point interest rate cut.
In his comments on Tuesday, he said investors should not assume that the BoE's latest forecast - that inflation would get back to target by early 2027 based on recent market pricing - was a direct endorsement of their bets on future rate cuts.
He said there was a risk that Britain's productivity growth remains weak - as set out in a more inflationary outlook scenario highlighted by the BoE last week - and there were echoes of past inflation crises in the rise in wage demands triggered by the jump in prices over the past few years.
"I remain concerned that we have seen a sort of structural change in price and wage-setting behaviour, maybe driven by the type of things that were involved in models of the inflation process from the '70s and '80s," he said.
Pill was speaking at a conference organised by the London School of Economics.
(Reporting by David Milliken and Suban AbdullaWriting by William Schomberg)
The article discusses the Bank of England's stance on maintaining high interest rates due to persistent inflation concerns.
Interest rates might stay high as inflation in the UK could be stronger than expected, making it difficult to reach the BoE's 2% target.
Huw Pill is the Chief Economist at the Bank of England, expressing concerns about inflation and interest rates.
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