BOE likely to raise rates further in 2027, Pill tells FT
The Bank of England will probably need to raise interest rates further in 2027, over and above an increase at the next meeting in December, to combat inflation, Bank of England Chief Economist Huw Pill told the Financial Times in an interview published on Saturday. Britain’s central bank raised interest rates to 4% from 3.75% in its November meeting, the first rise since August 2023. Pill told…
The Bank of England is expected to continue raising interest rates in 2027, according to Huw Pill, the bank's chief economist. The central bank hiked rates to 4% from 3.75% in November, the first increase since August 2023. Pill stated that while the recent hike is a "significant step", further increases are necessary to bring inflation back to the 2% target.
He expects inflation to reach around 5% by mid-2027, driven by second-round effects from elevated energy costs. Pill considered a resolution to the US-Israeli conflict with Iran and a drop in energy prices as "very low probability" scenarios. He expressed concern that inflationary impacts could be magnified by second-round effects, suggesting the central bank should have acted sooner.
Markets currently predict 90 basis points of rate hikes by the end of 2027, potentially pushing rates close to 5% in 2027. Pill indicated he will not seek a third term as chief economist when his current term concludes in September 2027.
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