Interest rates may need to increase this year to keep rising prices under control, according to the Bank of England’s chief economist.
Huw Pill, who is from Cardiff, told the BBC’s Walescast podcast that the “speed limit at which you can run the economy is a bit lower than it’s been in the past”. Pill is one of only nine people in the UK who decide what the Bank of England’s interest rate should be, something which affects the cost of mortgages and the rates at which prices rise.
Pill has had a chance to see the 400,000 bars of gold bullion stored at the Bank and has confirmed that they’re “amazingly shiny.”
Huw is a member of the Monetary Policy Committee (MPC), which decides whether to raise or lower the Bank of England interest rate.
This rate helps determine the cost of mortgages, other borrowing and the return savers get on their money. It also controls inflation, which is the rate at which prices rise.
The Bank of England has an inflation target of 2%, but the rate currently stands at 2.8%.
Pill believes interest rates will need to increase this year to keep inflation down. He was in a minority of MPC members who voted for an increase in interest rates in June.
“I’ve been at the bank for 56 months, inflation’s been at or below target for three months, it’s been above target for 53 months,” he said.
“So I think that’s a reflection of the fact that, in part, we’ve had some bad luck, we’ve been subject to challenges, but perhaps we’ve been a little bit over optimistic about what the trend growth in the economy is.”