BoE's Pill Calls for Higher Rates as Iran Energy Shock Fuels Inflation
Bank of England chief economist Pill said the central bank should raise interest rates to fight off strong inflation spillovers from the Iran energy shock, arguing that more restriction is needed in the system than two months ago. He said disinflation had been stalling before the war and warned that second-round effects may be stronger.
Pill said he does not expect those second-round effects to be as strong as in 2022. He also said high long-dated gilt yields are not a reason to avoid raising Bank Rate if they reflect inflation concerns.
From the sources (25 posts)
@businessThe Bank of England should raise interest rates to fight off strong inflation spillovers from the Iran energy shock, according to its chief economist who set out his case for active policy in an unpredictable world
@firstsquawkBOE'S PILL SAYS DISINFLATION HAD BEEN STALLING BEFORE WAR
@firstsquawkBOE'S PILL STATES THAT THE ECONOMY REQUIRES GREATER RESTRICTIONS THAN TWO MONTHS AGO.
@firstsquawkBANK OF ENGLAND'S PILL STATED THAT FISCAL AND GLOBAL CONDITIONS AFFECT LONG-TERM MARKET RATES AND THE INFLATION OUTLOOK.
@firstsquawkPILL SAYS HIGH LONG-DATED GILT YIELDS ARE NOT A REASON TO AVOID RAISING BANK RATE, IF THEY REFLECT INFLATION CONCERNS
@firstsquawkPILL SAYS WE MUST NOT ALLOW OURSELVES TO DRIFT OFF INTO DEEP SPACE OF UNMOORED INFLATION DYNAMICS
@firstsquawkPILL SAYS I'M CONCERNED SECOND-ROUND EFFECTS MAY BE STRONGER
@financialjuiceBoE's Pill: Inflation tends to overshoot target than undershoot.
@firstsquawkBOE'S PILL SUGGESTS INCREASING INTEREST RATES FURTHER.
@firstsquawkBOE'S PILL SAYS INFLATION IS MORE LIKELY TO EXCEED TARGET THAN FALL SHORT.
@firstsquawkPILL SAYS STRONGER FINANCIAL RULES DON'T SOLVE THE BANK OF ENGLAND'S DECISION ON RAISING RATES.
@firstsquawkBOE'S PILL SAYS FOCUS SHOULD BE ON TACKLING SECOND-ROUND EFFECTS
@financialjuiceBoE's Pill: High long-dated gilt yields are not a reason to avoid raising bank rate, if they reflect inflation concerns.
@firstsquawkBOE'S PILL SAYS DELAYING ACTION UNTIL MARKET PRESSURE IS STRONGER WILL BE HARDER FOR BOE.
@firstsquawkPILL SAYS SECOND-ROUND IMPACTS RELATE TO BEHAVIOR AND ARE INFLUENCED BY BANK OF ENGLAND ACTIONS.
@firstsquawkPILL SAYS ZERO SECOND-ROUND EFFECTS WOULD BE EXCEPTIONAL
@financialjuiceBoE's Pill: We can't allow inflation dynamics to become uncontrolled.
@firstsquawkPILL SAYS I DO NOT EXPECT 2ND ROUND EFFECTS TO BE AS STRONG AS IN 2022
@financialjuiceBoE's Pill: Firms and households are more price sensitive than in past.
@financialjuiceBoE's Pill: We need more restriction in the system than 2 months ago.
@firstsquawkBOE'S PILL STATES HOUSEHOLDS AND BUSINESSES ARE CONCERNED ABOUT INFLATION.
@firstsquawkPILL SAYS LABOUR MARKET WEAKNESS MEANS SECOND ROUND EFFECTS LIKELY TO BE WEAKER THAN IN 2022
@financialjuiceBoE's Pill: I cannot say now if rate rise would only be temporary or a plateau for rates.
@firstsquawkPILL SAYS NOT CLEAR LABOUR MARKET IS AS LOOSE AS WHEN THERE WERE OIL PRICE SPIKES IN 2008 OR 2011
@firstsquawkPILL SAYS LATEST GDP DATA SHOWS SOME ROBUSTNESS