Bank of England chief economist Huw Pill said a near-term bank rate increase
would reduce the likelihood the Bank must adopt more aggressive tightening to
curb inflation pressures from the Iran war. He said a timely, well-communicated
rate rise does not necessarily signal the start of a prolonged, aggressive
hiking cycle and can prevent harmful "catch-up" nominal dynamics that would make
temporary inflation overshoots more persistent. Pill and two other MPC members
voted to hike in July. Rate futures put the probability of a 25bp move at this
month’s MPC slightly above 15%, while the November meeting is priced for a hike
at more than 70%.
