MNI BRIEF: BOE PILL Backs Further, But Gradual Tightening

The Bank of England's Chief Economist Huw Pill defended the Monetary Policy Committee's gradual approach to tightening while stating that more would be needed. The MPC was split in May between those seeking a 50 basis point hike and a 25 bps one and Pill made the case for the MPC to tread carefully along the tightening path, with uncertainties high and much depending on the evolution of energy prices.

"This tightening still has further to run," Pill said, while setting out the case for gradualism.

"Monetary policy responses to macroeconomic developments need to be measured and persistent if they are to be effective," Pill added. He also argued against making a separate assessment of the likely effect of gilt sales as it would amount to "double counting", as these would show up in tighter monetary conditions. The MPC is set to respond in August to the Bank's framework for sales.