Warning on Persistent Inflation

Bank of England (BoE) Chief Economist Huw Pill highlighted on Friday the potential for current inflation, driven by one-off effects, to spill over into more persistent inflation. He emphasized that the risks are "slightly higher" over the next two to three years, signaling a cautious outlook for the economy.

Monetary Policy and Disinflation Progress

Pill reassured that the BoE's monetary policy remains restrictive, with disinflation showing signs of ongoing progress. However, he pointed out a concerning gap: the speed of interest rate cuts may not align with the rapid changes in prices and wages, posing a challenge to economic stability.