Ilkam, then, huh pill.
The new chief economist of the Bank of England has kept his head above the parapet for the first time since leaving his job over the summer. What is the verdict? There doesn’t seem to be any major change from the predecessor Andy Haldane.
Pill said in a submission to the Treasury Select Committee that there are now “great concerns” about inflation because “the current strength of inflation proves to be longer-lasting than originally anticipated”.
The comments — his first public statement since taking the job — suggest Pill, while less bombastic, isn’t too far in thinking from Haldane.
The former chief economist of the BoE was a staunch supporter of the Monetary Policy Committee. His exit left a huge gap when it came to challenging the statement that the current inflation spike is just “temporary”.
The MPC still sticks to that approach but is getting harder to defend day by day. Wherever you look, prices are skyrocketing. It is no longer just because of constraints. Higher wages are starting out, which will prove to be a more persistent inflationary pressure. Unlike shipping costs, wages are much harder to reduce once they go up.
There is bogeyman stagflation in all of this – stagnant growth and rising inflation. Action is still needed to stop this toxic mixture from uprooting.
Investors expect the Pill to put pressure on MPC to act. The prospect of a rate hike this year is rapidly diminishing. Pill has some convincing assignments to bring the rest of the committee together – but the case is getting stronger by the day.