(Adds more on Pill's view of the inflation outlook, paragraphs
9-12)
By David Milliken
LONDON, April 4 (Reuters) - Britain's central bank still
cannot be sure that it has raised interest rates enough to tame
inflation, although significant past tightening should soon bear
down on the economy, Bank of England Chief Economist Huw Pill
said on Tuesday.
"On balance the onus remains on ensuring enough monetary
tightening is delivered to 'see the job through' and sustainably
return inflation to target," Pill said in remarks published by
the BoE, ahead of a speech he was due to deliver in Geneva.
Pill voted with the majority on the BoE's Monetary Policy
Committee last month to raise the BoE's main interest rate to
4.25% from 4%, its 11th rate rise since starting to increase
rates in December 2021.
Pill previously talked in February about how it was
"critical" for the BoE to see through its task of raising
interest rates to control inflation.
His rate view contrasts with that of colleague Silvana
Tenreyro, who said at a separate event on Tuesday that the rapid
pace of tightening meant the BoE might have to cut rates
"earlier and faster".
Pill said he could not offer guidance on how he would vote
at the BoE's next rate decision on May 11. Financial markets see
a 70% chance of another quarter-point rate increase then.
"Although headline inflation is set to fall significantly in
the course of this year owing to a combination of base effects
and falls in energy prices, caution is still needed in assessing
inflation prospects on account of the potential persistence of
domestically generated inflation," he said.
British consumer price inflation peaked at 11.1% in October,
a 41-year high, and was still above 10% in February. The BoE
forecasts it will fall sharply during the current quarter and
that it will be below 4% by the end of this year.
Both Pill and Tenreyro said the prospects for a sharp fall
in inflation looked stronger than they did a few months ago,
thanks to a slowdown in some of the most recent measures of
private-sector wage growth and lower oil and gas prices.
"Relative to where we were ... the difficult 'trade-off'
facing monetary policy as a result of the adverse terms of trade
shock - that is to say, rising inflation in concert with a
squeeze on domestic real incomes and spending - has eased," Pill
said.
However, there was a risk that the improvement in domestic
demand and employment prospects was not matched by the economy's
supply capacity, creating ongoing inflation risks, he added.
"The MPC will need to exercise its judgement about which of
these two underlying stories is more relevant," Pill said.
(Reporting by David Milliken
Editing by William Schomberg)
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