The Bank of England’s chief economist, Huw Pill, told an Institute of Chartered Accountants in England and Wales event on Tuesday that a further tightening of monetary policy will be required to tame inflation, which has climbed to a 40-year high of 9% and is expected to peak at just over 11% in October. However, he appeared to reject a suggestion from fellow MPC member Catherine Mann, who said on Monday that the Bank should raise rates to strengthen the pound, arguing that although Threadneedle Street should be aware of “developments in the exchange rate” it did not have an exchange rate target, or a target for real incomes, but it did have a target for inflation.
Sterling has fallen almost 10% this year, making imports more expensive. Mr Pill said: “I worry that thinking that we can use that very blunt tool to do many things…. can distract us from the task we’ve been given to do and end up meaning that we are much less effective in achieving that task.” Ms Mann was one of three ‘hawks’ in the MPC who voted to increase the Bank Rate half a percentage point to 1.5% at last week’s meeting. Mr Pill was one of the doves who backed a 0.25pp increase but has said that he would support faster rises if there were signs of a sustained inflationary pressures through wage increases or firms pushing up prices.
Read more: The Times
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