Bank of England's Chief Economist Huw Pill said on Friday that inflation "is set to be high well into 2023" after reaching double digits toward the end of 2022. "Given the current tightness of the UK labor market and strength of corporate sentiment, at least over the coming year the potential for second-round effects in domestic wage and price setting is obvious," he warned.
Pill explained that the current inflation momentum does not in itself justify tighter policy today, as the BoE must calibrate its stance "to be appropriate at a horizon of 18 months to two years." However, in the interest of achieving the BoE's target of 2%, Pill said he supports a tightening of monetary policy and believes that "we still have some way to go" in policy tightening.
