BoE likely to raise rates further in 2027, Pill says
TLT•Bank of England Chief Economist Huw Pill said further rate rises will probably be needed in 2027, after the bank raised its rate to 4% in November. The BoE expects British inflation to reach around 5% in the middle of next year.
1. Further rises likely
Pill said the Bank of England will probably need to raise interest rates further in 2027, beyond an increase at its December meeting, to combat inflation. The bank raised its rate to 4% from 3.75% in November, its first increase since August 2023.
2. Inflation risks
Pill called the November increase a “significant step” but said there was “further to go.” He cited risks that elevated energy costs could feed into wages and other prices, and said the BoE expects inflation to rise to around 5% in the middle of next year, more than double its 2% target. Pill said expectations for 90 basis points of tightening by the end of 2027 were “not outrageous.”
3. Pill’s plans
Pill said he believed the central bank had waited too long to combat inflation and that delays had reduced its ability to make modest rate increases. He signalled he would not seek a third term as chief economist when his current term ends in September 2027.
