MNI BRIEF: BOE Pill Makes Case For Gradualism In Hiking Rates

Bank of England Chief Economist Huw Pill on Friday warned against large rate hikes, advocating instead for tightening through a string of smaller increases. The Bank's Monetary Policy Committee made its fourth successive 25 basis point hike Thursday.

Pill, speaking at a BOE agents event, said that if the policy rate was hiked more than 50 basis points in one go the risk would be that "that monetary policy itself becomes a source of some volatility." He said that the MPC was agreed that it should "not make overly aggressive .. moves but rather have a smoother and more sustained and resolute and purposeful approach to policy".

"That .. has been one of the reasons why I have favoured a set of moves in the same direction rather than one big move," he said. Three MPC members backed a 50 bps hike in May but Pill was in the majority, voting for 25 bps.