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An FT interview with BoE economist Huw Pill hit late on Thursday. Some of the key snippets are below:

  • The BoE will have a "live" decision on whether to hike interest rates at its November meeting, noting the decision "is finely balanced."
  • "I would not be shocked - let's put it that way - if we see an inflation print close to or above 5% (in the months ahead). And that's a very uncomfortable place for a central bank with an inflation target of 2% to be."
  • Pill suggested that traders should not become too focused on the precise timing of any rate rise, noting that "maybe there's a bit too much excitement in the focus on rates right now. The big picture is, I think, there are reasons that we don't need the emergency settings of policy that we saw after the intensification of the pandemic… We do not see, given the transitory nature of what we're seeing in inflation in our base case, a need to go to a restrictive (policy) stance.
  • "We've entered a different phase. Because there are risks on both sides (from inflationary pressures being too high or too low), it's less clear what the direction of monetary policy will be at any one point in time and that's going to lead, I think, to more controversy and more potential for disagreement within the (MPC). But that's a sign of success because we've got out of the regime where monetary policy was boring."
  • Pill said forward guidance tends to start "pretty well" but then "always ends in some confusion".
  • "We are not expecting to see a big tick-up in the unemployment rate". But in a "labour market that is quite tight" he does not envisage wage rises that would threaten a second round of inflationary worry.
  • Pill said he was "paid to worry about inflation."
  • Click for full interview.