The playing out of those shocks through the economy, and the continued tight and impaired labour market, means that inflation will remain above target for quite some time. I would rather hold rates until there is more certainty that underlying inflationary pressures have subsided sustainably.
Jonathan Haskel, Member of the Bank of England Monetary Policy Commitee and Professor at Imperial College London
11 July 2024
'Inflation will remain above target for quite some time'
Bank of England Monetary Policy Committee member Jonathan Haskel has said that despite ‘encouraging signs’ he would rather hold interest rates until it is clearer that inflationary pressures have subsided sustainably.
In a speech at the Economic Statistics Centre of Excellence at King’s Business School on Monday – the first by any Bank policy-maker since the general election – he stressed his view that the return of headline inflation to the 2% target in May 2024 was temporary.
The next Bank of England Monetary Policy Committee interest rate decision will be announced on 1 August, with some City economists predicting a cut in rates.
However, Jonathan Haskel, a Member of the Bank of England Monetary Policy Commitee and a Professor at Imperial College London, noted that the economy is still experiencing ‘second round’ effects from the food and energy price shocks during the pandemic and in the aftermath of the invasion of Ukraine.
Professor Haskel comes to the end of his term on the MPC at the end of August and in his speech he reflected on the challenges for the Bank in the years to come, welcoming the decision to embrace the recommendations of the independent review by economist Ben Bernanke on its forecasting capabilities.
He also underscored the importance of having and communicating good data about the economy as crucial to maintaining the public’s trust in interest rate decisions.
With good data, models and economics my successors can take and explain hard decisions. There will be times when this doesn’t earn the public’s affection, but it will end up earning their trust.”
Jonathan Haskel, Member of the Bank of England Monetary Policy Commitee and Professor at Imperial College London
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Professor of Practice in Economics