Interest rates

Interest rates will rise to an “appropriate” level

Huw Pill: more to do (photo: Bank of England)

Interest rates will rise again to keep inflation from taking root in the economy, but at an “appropriate” level ahead of a likely recession, a senior Bank of England official has said.

The Bank last week announced the biggest tightening in 33 years with a 75 basis point hike to take the rate to 3%, the eighth consecutive monthly increase.

Huw Pill, who replaced Andy Haldane last year as the Bank’s chief economist, said his Monetary Policy Committee (MPC) would raise rates again as it tries to break the inflationary cycle” self-sustaining” where companies continue to raise prices and demand for workers. Better wages.

The Bank warned last week that the UK would suffer its longest recession in a century if interest rates rose as high as 5.25%, as money markets expected in mid-October.

Even at the current pace, the economy is poised for a five-quarter recession starting this winter.

However, Mr Pill reinforced comments by Bank Governor Andrew Bailey, who said the MPC was not looking to raise rates to this level.

“We did some [tightening] and there is more to do. said Mr. Pill. “That doesn’t mean we’re going to advance at a set pace until the kingdom comes. At some point, you have to think about the appropriate rate level.