Bank of England chief economist Huw Pill expects rate rises in December and again in 2027
Pill told the Financial Times that this month's move to 4% was not the end of tightening, and that market bets on rates close to 5% next year were not outrageous.
By Daily Oracles News Team1 min read
Huw Pill, the Bank of England's chief economist, told the Financial Times in an interview published on Saturday that he expected the Bank would probably have to raise rates again at its December meeting and then further during 2027.
Pill described the increase from 3.75% to 4% on 5 November, the first rise since August 2023, as a significant step but said there was more to do. He indicated he was likely to support another quarter-point rise when the Monetary Policy Committee announces its next decision on Thursday 17 December.
Why he wants to go further
His concern is second-round effects: the risk that higher oil and gas prices caused by the war involving Iran feed into pay claims and then into prices for longer. Pill told the paper he saw only a very low chance of the conflict ending and energy prices falling back.
The Bank's own November forecast has consumer price inflation, 3.5% in September, rising to around 5% by the middle of 2027. That would be more than double the 2% target.
What markets expect
Financial markets expect Bank Rate to rise to close to 5% during 2027. Pill said those expectations were not outrageous.
The committee's first decisions of next year are due on Thursday 4 February, alongside a new Monetary Policy Report, and Thursday 18 March.
Pill is one of nine votes. In November the committee split 8-1, with Catherine Mann the only member wanting a bigger rise, to 4.25%. The Bank's summary says policy is not on a pre-set path and will be decided meeting by meeting.
