LONDON – The Bank of England may have to take further action if higher wages and other domestically driven inflation pressures prove more persistent than the central bank is forecasting, BoE Chief Economist Huw Pill said on Friday.
“A key assumption in our forecast… is that we don’t see from the middle of next year, persistence emerging in wage and domestic cost developments, stemming from these second-round effects,” Pill told Bloomberg Television.
“It’s that lack of that, the fact that policies including monetary policy do enough to avoid that, that is central to bringing our inflation back towards target. If we were to see developments that were not consistent with that assumption, then of course, we would have to think about further action.”
Pill was speaking a day after the BoE raised rates for the second time in two months and said further modest tightening was likely to be needed over the coming months.