British central bank chief economist Huw Pill warned on Wednesday that the UK economy will slow over the next 12 months and repeated his preference for a “firm-handed” approach to rate hikes. of interest.
With inflation heading into double digits and growth in the economy rapidly losing steam, Pill said the Bank of England is trying to forge a narrow path between these two forces and bring consumer price increases back to its target of 2 %.
International institutions such as the International Monetary Fund and the OECD say the UK is more susceptible to recession and persistently high inflation than other Western countries grappling with shocks in global energy and commodity markets.
The political turmoil — with Prime Minister Boris Johnson reeling from the resignation of his health and finance ministers on Tuesday — added to the sense of turmoil in the UK.
“We don’t really expect to see any growth in the economy over the next year,” Pill said after speaking at a conference hosted by King’s College London’s Qatar Center for Global Banking & Finance.
Last month, the Bank of England’s Monetary Policy Committee said it was ready to “act strong if necessary” to tackle inflation that is likely to exceed 11% this year.
For now, he has stuck to his preferred “steady-handed” approach and warned that large moves in the central bank’s benchmark rate could be counterproductive.
“Isolated bold moves can be disruptive in terms of their impact on financial markets,” Pill said, responding to questions from the audience.
Source: CNN Brasil
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