Interest rates will likely need to be cut more slowly due to stubborn inflation, according to Bank of England chief economist Huw Pill.
If the Bank does resist rate cuts, the cost of borrowing will remain higher for longer.
A member of the rate-setting Monetary Policy Committee (MPC), Pill said this morning underlying price growth was too strong and high inflation expectations risked becoming embedded.
By contrast, Bank governor Andrew Bailey said earlier this week that underlying inflation pressures were cooling.
Pill has been one of the most vocal committee members about inflation risks and voted against the Bank’s rate cut to 4% in August.
“The need to recognise the stubbornness of inflationary pressures is becoming more pressing,” Pill said earlier.
“The MPC should adopt, from this point forward, a more cautious pace in withdrawing monetary policy restriction so as to ensure continuation in disinflation towards the 2% target.”
He urged caution to “guard against the risk of cutting rates either too far or too fast”.
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