Financial institution of England must stability charge hikes and financial dangers, says chief economist
A passageway near the Bank of England (BOE) in the City of London, UK on Thursday 18th March 2021.
Hollie Adams | Bloomberg | Getty Images
LONDON — The Bank of England needs to keep raising interest rates to bring inflation under control without hitting the UK economy too hard, chief economist Huw Pill told CNBC on Friday.
“What we’re trying to do, we’re always trying to do, is find the balance that gets us back to our 2% inflation target without creating unnecessary and costly problems on the real side of the economy,” Pill said.
“And so it creates that balance, signals that balance, that was really our key message yesterday.”
The Bank of England hiked interest rates by 75 basis points on Thursday, the largest single hike since 1989, and warned of a prolonged recession as policymakers sought to dampen market expectations for further aggressive monetary tightening.
“We do not believe that interest rates would need to rise as high as the market has been pricing in, precisely because doing so would cause the economy to slow down more than needed to contain these inflationary dynamics,” Pill added.
This is breaking news and will be updated shortly.