Bank of England's Huw Pill warns inflation could hit 'very uncomfortable' 5%

Inflation in the UK could hit a "very uncomfortable" 5%, according to Huw Pill, the Bank of England's new chief economist.

According to the Financial Times, Pill said the question of increasing interest rates would be raised at the Monetary Policy Committee's November meeting, stating: "I think November is live".

"I would not be shocked — let's put it that way — if we see an inflation print close to or above 5%," he said. "And that's a very uncomfortable place for a central bank with an inflation target of 2% to be."

Markets have already priced in the Bank of England raising rates by 15 basis points next month, a move that would make it the first of the world's big central banks to hike borrowing costs since the beginning of the Covid-19 pandemic,

"The big picture is, I think, there are reasons that we don't need the emergency settings of policy that we saw after the intensification of the pandemic," said Pill.

However, the economist also indicated to the FT that rates would not need to be raised much higher than their pre-pandemic level of 0.75%.

"We do not see, given the transitory nature of what we're seeing in inflation in our base case, a need to go to a restrictive [policy] stance," he said.