Interest rates may need to rise this year, says Bank of England economist
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- Huw Pill, the Bank of England's chief economist, told the BBC's Walescast podcast that interest rates may need to increase in 2025 to keep rising prices under control.
- UK inflation stands at 2.8%, 0.8 percentage points above the Bank's 2% target, and Pill noted inflation has been above target for 53 of the 56 months since he joined the Bank in early 2022.
- Pill was in a minority of Monetary Policy Committee members who voted for a rate increase at the June meeting, making him a public voice for further tightening.
- Wales has the lowest productivity of the UK's four home nations — roughly 15% below the UK average, with lower wages and some of the highest welfare claim rates — and Pill said better infrastructure and education are key to raising living standards.
- Before joining the Bank, Pill worked at the European Central Bank from its inception through the Eurozone crisis, arguing countries like Greece, Spain, Portugal, and Ireland emerged 'in stronger shape' after painful economic adjustments.
Why it matters: Pill is one of nine MPC members who set the rate that determines UK mortgage costs and savers' returns. His June dissent for a hike and public call for further tightening — with inflation stuck at 2.8% — signals the Bank may not be finished raising rates, a direct hit to borrowers already facing elevated costs.
