LONDON (Reuters) – The Bank of England needs to raise interest rates further, but not as high as the 5.% level previously priced in by the central bank in financial markets. Bank of England chief economist Huw Pill said on Friday the bank’s latest interest rate decision.
Pill is briefing businesses on the Bank of England’s decision on Thursday to raise interest rates from 2% to 3%. 25% – Biggest rate increase since 1989 as it matches the highest inflation in 40 years and potential long-term recession.
Pill’s remarks are closely linked to the line laid out by Bank of England Governor Andrew Bailey and a statement agreed by a majority of the Bank of England’s Monetary Policy Committee.
“Based on our 3% constant rate scenario, we are uneasy that inflation is moving within two years of the 2% target, ” he said, citing upside risks to inflation from factors such as a tight labor market.
“There’s more work to do… (but) the market is pricing a little bit in favor of higher rates as we see fit,” he added.