Weak UK activity isn’t putting much downside pressure on inflation

Bank of England (BoE) Chief Economist and Monetary Policy Committee (MPC) member Huw Pill gave talking points while participating in a panel discussion at the Annual National Association for Business Economics Economic Policy Conference, in Washington DC late Friday. 

The panel discussion is titled “Perspectives on Global Monetary Policy”.

Key highlights

• BoE has good news on headline inflation, but needs to take a look at persistent components.
• UK labor market remains tight, driven by both weak supply and strong demand.
• The economic situation in the UK looks “a little less benign” than in the US.
• Services inflation in particular remains a reason for concern.
• Only modest evidence of a reversion in inflation.
• Recession is not necessarily forcing down inflation.
• Plenty of reasons for caution over trajectory of inflation, need to see further easing of wage pressures.
• BoE will need several months of data before being convinced persistent inflation is gone.