There is significant progress on inflation

Bank of England (BoE) Chief Economist Huw Pill said on Tuesday, “there is significant progress on inflation.”

Further comments

5% inflation would be much too high still.

Today’s pay data is down a but not consistent with 2% inflation on ongoing basis.

Underlying inflation dynamics are finely balanced.

Resilience of the UK economy seen to date seems to be easing.

If we don’t restrain demand to get inflation back to target we risk being forced into more aggressive measures.

One of the risks I see is that underlying inflation persistence may be a bit more sustained because of supply issues.

We need to meet inflation persistence with peristent restrictiveness in policy.

We don’t necessarily need to raise interest rates further but are prepared to if needed.

BoE must focus on inflation, not tackling other issues in the UK economy.

Weakening economic acvitity is showing up in some of the labour market data.

I think risk is still that we are seeing too much momentum in inflation to get us back to 2% target.

We are able to assess state of labor market despite ONS issues.

Market reaction

GBP/USD is building on the latest uptick on BoE policymaker Pill’s comments. The pair is currently trading at 1.2420, up 1.21% on the day.