By City A.M. Reporter
Bank of England Chief Economist Huw Pill said on Friday that Britain’s persistently high inflation would not necessarily fall quickly as demand slows.
“The overall judgements of the MPC has a little bit switched from being associated with demand factors to be more associated with supply factors,” Pill said during an online presentation organised by the BoE.
“We can be less sanguine about the idea that the slowing of demand, the slowing of activity that we are seeing will lead to inflation returning to target.”
Along with the Bank of England, the US Federal Reserve also voted to hold its interest rates this week.
Hunt will keep working with Bank on bonds
Meanwhile, chancellor Jeremy Hunt said on Friday that the government would carry on working with the Bank of England over the central bank’s sales of its massive bond-buying purchases, which represent a big cost for the government.
“HM Treasury and Bank of England officials will continue to monitor the APF’s (Asset Purchase Facility’s) implementation and risks to the Exchequer,” Hunt said in an exchange of letters with BoE Governor Andrew Bailey.
“Any future cash transfers will be handled under the terms of the indemnity as has been the case to date.”
Hunt agreed to reduce the authorised maximum size of the APF to £751bn under an update to the programme which reflects the BoE’s bond sales.
Reuters – William Schomberg, Kylie MacLellan
