Bank of England Chief Economist Expects Further Rate Hikes by 2027

Bank of England Chief Economist Huw Pill has warned that there may be further rate increases next year on top of a potential hike in December. In the face of accelerating inflation, some monetary policymakers have adopted a more hawkish stance. Pill stated that last week's rate increase of 25 basis points to 4% was an important step towards returning monetary policy to a more appropriate state, but "there is still a long way to go." He mentioned that evidence prompting further rate hikes could emerge next year, considering that high energy costs may further impact wages and corporate pricing. Pill emphasized that the Bank of England's 2% inflation target requires necessary measures to ensure its achievement, and the pressure to meet this target is currently greater. Regarding market expectations of a rate close to 5% by 2027, Pill believes this expectation "is not without reason" and pointed out that the risks observed are sufficient to support some of the rate hike expectations priced into the market, but he was unwilling to clearly state whether he supports the full extent of the hikes already factored in by the market.

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