BoE's Pill says bank must hold firm in battle against inflation -FT
(Reuters) -Bank of England Chief Economist Huw Pill said it had to hold firm in its battle against inflation and it cannot afford to ease off tight monetary policy, the Financial Times reported on Friday.
Pill said headline inflation had come down, which was largely «exogenously driven» as energy, food and international goods prices had stabilised, but the bank needed to focus on bringing domestically generated inflation down.
«There’s slower growth in activity and employment as we've discussed. But because I think that is more supply-driven rather than demand-driven, the weakening of activity is not as associated with easing of inflationary pressures,” Pill said.
»To the extent that you think that slowing activity, spending and employment growth are associated with a deterioration in the supply performance of the economy, and not just a weakening in demand, you are not opening up that slack, that easing of resource pressures, which will bring domestically generated inflation down."
Service inflation and pay growth, key indicators the bank was focusing on, remained at «very elevated levels», he added.
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