Bank of England cautious about risks from expected dip in inflation

Published Fri, Feb 6, 2026 · 09:53 PM

Bank of England chief economist Huw Pill said on Friday (Feb 6) that there was a risk that the central bank draws too much comfort from an expected fall in inflation in April, and that it was important to make sure price growth does not go below target.

Just as the BOE sought to look through a temporary hump in inflation in 2025 that partly reflected one-off regulatory measures, it should not put excess weight on a dip in inflation to 2 per cent forecast for April when lower regulated energy prices take effect, Pill said.

“There is ... a risk that we draw too much comfort from the ditch in short term inflation dynamics that (was) created by the downside fiscal measures announced last November, and we lose a little bit of a track of where the inflation that is going to be the lasting dynamic in price developments that will still be there once all these one off effects fade out,” he said.

Speaking to businesses after the BOE’s February interest rate decision, he said monetary policy would need to continue to address any persistence in inflationary pressures.

Pill was part of the 5-4 majority on the BOE’s Monetary Policy Committee who voted to keep rates on hold at 3.75 per cent this week, after December’s quarter-point cut.

In policy minutes published on Thursday, Pill said the BOE had been cutting rates too fast and that he was concerned that future inflation pressures would make it hard for inflation to stay durably at target after it falls later this year. REUTERS

Decoding Asia newsletter: your guide to navigating Asia in a new global order. Sign up here to get Decoding Asia newsletter. Delivered to your inbox. Free.