By David Milliken and Suban Abdulla
LONDON (Reuters) -Bank of England Chief Economist Huw Pill said on Tuesday that he did not expect his view on interest rates to shift much in the near term, saying wage growth was still substantially above what he viewed as consistent with the BoE’s inflation target.
“I think when you’re talking about wage growth … that’s still growing substantially above … what is consistent with the 2% inflation target,” Pill told a panel hosted by French financial services company Natixis, pointing to weak productivity in the labour market.
The BoE’s Monetary Policy Committee was split 5-4 this month, with Pill part of the majority supporting keeping rates on hold. Governor Andrew Bailey indicated that he might change his vote to support a cut at December’s meeting, depending on incoming data.
Asked whether his view on borrowing costs had shifted since the BoE’s meeting earlier this month, Pill said that he did not expect his view on rates to shift that much.
He also said policymakers should not place too much weight on often-noisy short-run economic data when assessing how rapidly inflation pressures are easing.
Pill said that he did not think Britain’s underlying inflation pressures were as high as headline inflation of 3.8% might suggest.
But he noted that data measures related to inflation had not slowed as much as he would have expected in the past, despite an apparent recent slowdown in wage growth and higher unemployment.
“I think policymakers should be cautious about over-interpreting the latest news in data, because there is a lot of noise in the data flow, and partly because of some of the challenges our colleagues in the Office for National Statistics have faced,” he said.
(Reporting by David Milliken and Suban Abdulla)
