Interest rates will need to rise quickly to head off the threat of inflation, according to the Bank of England’s chief economist.
Huw Pill told an audience in Edinburgh that ther were “dangers” in waiting for firmer evidence of the impact of conflict in the Middle East.
Mr Pill has voted for an interest rate rise, but was just one of just two members of the nine-member Monetary Policy Committee (MPC) who backed such a rise from 3.75% to 4% at the July meeting.
With hostilities resuming and oil prices once again rising, Mr Pill said: “In my view, in this environment we cannot wait for uncertainties to resolve themselves before acting.
He argued that “clear, prompt and decisive policy action and communication would help steer markets, reduce uncertainty”.
He added: “It is now six months since the onset of conflict in the Middle East. How or when the conflict will be resolved and, more importantly, the magnitude of its implications for UK inflation, remain unclear: essentially as unclear as they were six months ago.
“Given all this, I am uncomfortable with a ‘wait-and-see’ framing of the MPC’s current decisions over bank rate.”
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