Market News

(Bloomberg) --

The Bank of England is prepared to hike interest rates at quicker pace if needed to prevent inflation from becoming embedded, Chief Economist Huw Pill said.

The remarks are among the clearest signal yet that BOE insiders such as Pill, who have previous expressed doubts over lifting rates in a half-point step, may consider such a move in August. The BOE, which has hiked rates at five straight meetings, has previously moved in smaller increments than some of its international peers.

The BOE’s June pledge to “act forcefully” to persistence in inflation “reflects both my willingness to adopt a faster pace of tightening than implemented thus far in this tightening cycle, while simultaneously emphasizing the conditionality of any such change in pace on the flow of new data and analysis,” Pill said in a speech on Wednesday.

“Much remains to be resolved before we vote on our August policy decision. How I vote on that occasion will be determined by the data that we see and my interpretation of it,” he added.

Still, Pill also said the BOE’s updated guidance was designed to give greater flexibility to its communication, and reflected both the uncertainties the BOE face and the likelihood that future decisions may become more finely balanced as officials weigh the competing forces of faster inflation and lower growth.

He added it shows officials will prioritize ‘the more persistent component of inflation developments over the headline spot measure,” when it comes to making decisions, he said.