Bank of England boss Andrew Bailey has insisted the central bank is “not complacent” about bringing down UK inflation following warnings from its chief economist.
Mr Bailey said he was “not happy” that the rate of Consumer Prices Index (CPI) inflation was above the Bank’s 2% target.
The Governor said in an interview with CNBC: “We’re not complacent.
“It’s perfectly reasonable for people to take different views. One of the strengths of our committee is that you do have quite different views that are expressed, and that’s good, I welcome that.
“Huw Pill does take a different view on that and he’s quite justified to take that position.
“Of course we’re concerned. We’re not complacent at all.”
Mr Pill, the Bank of England’s chief economist and member of its rate-setting committee, told the Press Association earlier this week that the Bank “should not be complacent” about the threat of CPI rising as a result of oil and gas prices surging amid the US-Israeli war with Iran.
He said he thinks inflation running one percentage point above the target “should be seen as problematic, because our mandate is very clear; inflation at 2% at all times”.
Official figures showed the UK’s CPI rate was 2.8% in April, the same as March, and the Bank is expecting it to rise as high as 3.2% later this year.
Mr Pill has voted to increase interest rates to 4% at the Bank’s last two meetings – the only member of the nine-person committee to vote that way in April, and joined by one other member, Megan Greene, in June’s vote.
Governor Mr Bailey, who was in the majority opting to keep rates unchanged at 3.75%, told CNBC: “I’m in a somewhat different position.
“I think it’s frustrating, but I do think that we’re operating against a softer economy at the moment so looking forwards… the evidence would suggest that we will come back to target, but frustratingly later than we thought we would.”
He added: “I’m not happy about the fact that inflation is above target at all, but we do have to judge it in context and looking forwards.”
Mr Bailey said the UK had faced a “negative supply shock” with “higher inflation and weaker activity” which means having to “make a judgment about what’s the right course back to target”.
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