Finance
Bank of England's Pill says underlying inflation running at about 2.5%
Published by Global Banking & Finance Review®
Posted on February 13, 2026
1 min readLast updated: February 13, 2026
Quick Summary
BoE's Huw Pill estimates UK's underlying inflation at 2.5%, above the 2% target, influencing interest rate decisions.
Bank of England's Huw Pill Estimates Underlying Inflation at 2.5%
Analysis of Underlying Inflation in the UK
LONDON, Feb 13 (Reuters) - Bank of England Chief Economist Huw Pill said on Friday he thought underlying inflation in Britain was settling at about 2.5% a year, higher than the central bank's 2% target.
Current Inflation Rate
"I think when we look at where we are now, short of something happening, underlying inflation is going to be two and a half percent, once we take that half percentage-point impact from the budget out of the forecast we have for April/May," Pill said at an event hosted by Santander, a bank, in London.
Interest Rate Decisions
Last week Pill voted with a narrow majority of the BoE's Monetary Policy Committee to keep interest rates on hold at 3.75% and in December he opposed the decision to cut rates by a quarter of a percentage point.
Inflationary Pressures
In minutes of February's decision, Pill said interest rates had been cut too fast previously and that inflationary pressures stemming from that "still need to be contained and eliminated".
(Reporting by David MillikenEditing by William Schomberg)
Key Takeaways
- •Huw Pill estimates UK's underlying inflation at 2.5%.
- •This rate is above the Bank of England's 2% target.
- •Interest rates were held at 3.75% by a narrow majority.
- •Pill opposed the previous rate cut in December.
- •Inflationary pressures need further containment.
Frequently Asked Questions about Bank of England's Pill says underlying inflation running at about 2.5%
1What is inflation?
Inflation is the rate at which the general level of prices for goods and services rises, eroding purchasing power. It is typically measured as an annual percentage increase.
2What is the Bank of England?
The Bank of England is the central bank of the United Kingdom, responsible for issuing currency, managing monetary policy, and maintaining financial stability.
3What are interest rates?
Interest rates are the amount charged by lenders to borrowers for the use of money, expressed as a percentage of the principal. They influence economic activity and inflation.
4What is monetary policy?
Monetary policy is the process by which a central bank, like the Bank of England, manages the supply of money and interest rates to achieve specific economic goals.
5What is underlying inflation?
Underlying inflation refers to the long-term trend in inflation, excluding temporary price changes caused by volatile items like food and energy, providing a clearer picture of inflationary pressures.
