Huw Pill against BoE's 'wait and see' approach to inflation risks

(Sharecast News) - The chief economist at the Bank of England has suggested that interest rates may have to rise to battle rising inflationary pressures caused by elevated oil prices. Speaking at an event put on by Barclays in Washington DC, Huw Pill said he was against the "wait and see approach" currently being deployed by many central banks, including the BoE.

BoE governor Andrew Bailey said this week that policymakers are not in a rush to tighten monetary policy, saying it was "really too early to form strong judgments" on whether the Iran war will be a protracted conflict.

However, Pill said: "I'm a little bit skeptical of a line you hear a lot of - wait and see - because I think you have to be clear what you're expecting to see. It's very difficult to imagine we're going to be able to have that all clear."

He added: "If you're waiting and seeing and you don't see, then you're just waiting. And I'm not sure waiting is necessarily the appropriate response, to the sort of inflationary dynamics which have the potential at least to have some self-sustaining momentum."

Speaking of the current approach by the BoE, which last month kept the Bank Rate at 3.75% for the second straight meeting, Pill said: "For me, on balance, I think we still have some restriction [...] But I think we do have to entertain the possibility that more may be required."

The Monetary Policy Committee is set to make its next interest rate decision on 30 April.