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MNI BRIEF: BOE Pill Sees More Persistent Inflation Risk

(MNI) London
(MNI) London

Bank of England Chief Economist Huw Pill warns that the UK's mix of a tight labour market and supply bottlenecks creates conditions for more persisent high inflation.

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Bank of England Chief Economist Huw Pill warned that the conditions are in place in the UK, because of its already tight labour market and declining labour supply, for elevated inflation to become more enduring. Pill's comments, in a speech at the Money Market Association of New York University, suggest that he believes further monetary tightening may well be required.

Pill raised the possibility that the natural jobless rate, the rate compatible with stable inflation, may have risen, which would entail that even rising unemployment may not initially be enough to curb inflation and that the Bank's Monetary Policy Committee is looking again at its assumption on the labour market link to inflation.

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Bank of England Chief Economist Huw Pill warned that the conditions are in place in the UK, because of its already tight labour market and declining labour supply, for elevated inflation to become more enduring. Pill's comments, in a speech at the Money Market Association of New York University, suggest that he believes further monetary tightening may well be required.

Pill raised the possibility that the natural jobless rate, the rate compatible with stable inflation, may have risen, which would entail that even rising unemployment may not initially be enough to curb inflation and that the Bank's Monetary Policy Committee is looking again at its assumption on the labour market link to inflation.

Keep reading...Show less