The Bank of England’s new chief economist has warned that UK inflation is likely to hit or surpass 5% by early next year.
Huw Pill told the Financial Times that the Bank would have a “live” decision to make at its next interest rate-setting meeting on 4 November.
It follows recent comments from Bank of England governor Andrew Bailey who said it “will have to act” on inflation.
The UK interest rate has been at a historic low of 0.1% since March 2020.
Recent data showed that inflation growth slowed to 3.1% in the year to September. However, it is expected to increase because of rising energy costs, higher wages to fill record vacancy numbers and supply chain disruption.
Mr Pill, who succeeded the Bank of England’s former chief economist Andy Haldane last month, said he would “not be shocked” to see inflation reach 5% or above in the coming months.
He told the Financial Times: “That’s a very uncomfortable place for a central bank with an inflation target of 2% to be.”