The Bank of England’s chief economist said policymakers are ready to take “aggressive action” if there is further evidence that soaring inflation is becoming embedded in pricing by firms.
The Bank hiked interest rates 0.25 per cent for the fifth straight time this week, taking the base rate to 1.25 per cent. But chief economist Huw Pill told Bloomberg TV today that the Bank would be willing to act more “forcefully” if required.
“If we see greater evidence that the current high level of inflation is becoming embedded in pricing behaviour by firms, in wage setting behaviour by firms and workers, then that will be the trigger for this more aggressive action,” he said.
Pressure has grown on the Bank and governor Andrew Bailey to move faster to tackle inflation in recent weeks, amid a growing wave of criticism over the speed of decision making in hiking rates.
The Bank’s quarterly inflation attitudes survey last week showing that more people are dissatisfied than satisfied with the Bank’s handling of inflation for the first time, while just 25 per cent of respondents were pleased with the Bank’s performance, the lowest level since the survey began in 1999.