Huw Pill, chief economist at the Bank of England, speaks during an interview in London, UK. Bloomberg
Huw Pill, chief economist at the Bank of England, speaks during an interview in London, UK. Bloomberg
Huw Pill, chief economist at the Bank of England, speaks during an interview in London, UK. Bloomberg
Huw Pill, chief economist at the Bank of England, speaks during an interview in London, UK. Bloomberg

Bank of England warns of 'persistent inflation' and higher interest rates


Soraya Ebrahimi
  • English
  • Arabic

Inflation in the UK could become “more persistent” amid prevailing tough economic conditions, and interest rates may rise further, according to the Bank of England’s chief economist.

During a speech on monetary policy due to be delivered in New York, Huw Pill is expected to say that Britain is probably in a recession.

As a senior official influential in the Bank of England’s decisions over interest rates, he also confirms that the Monetary Policy Committee would be prepared to act “forcefully” if the outlook suggests more persistent inflation.

In the same speech, he will say that higher natural gas prices, a tight labour market and global supply bottlenecks create “the potential for inflation to prove more persistent”.

“It is therefore in this nexus that I focus in coming to my own assessment of the risks surrounding inflation persistence, which … will strongly influence my monetary policy position in the coming months,” he says.

The remarks suggest that Mr Pill would support another interest rate rise at the next committee meeting to put a lid on inflation.

Bank of England governor explains decision to increase interest rates — video

The base rate of interest is currently 3.5 per cent, the highest rate since October 2008, with the committee voting to increase the rate at each of its past nine meetings.

Mr Pill confirms in his remarks bringing down inflation to its 2 per cent target was the key driving force for the bank’s monetary policy decisions.

Higher energy prices across Europe, prompted by Russia’s invasion of Ukraine, have given a “significant impetus” to inflation over the past year.

But, even if natural gas prices stabilise or fall back down, inflation could remain high because households and businesses will still try to protect their incomes against higher energy bills, Mr Pill is expected to say.

UK's finance minister says he is focused on bringing down inflation as economy shrinks — video

“In an attempt to protect their own real income from the unavoidable impact of higher external prices, the longer that firms try to maintain real profit margins and employees try to maintain real wages at pre-energy price shock levels, the more likely it is that domestically generated inflation will achieve its own self-sustaining momentum, even as the external impulse to UK inflation recedes,” he explains.

It echoes similar recent remarks from the bank’s governor, Andrew Bailey, who said that while workers will want to seek pay rises as living costs soar, it could have the adverse effect of “locking in” high inflation in the UK.

Mr Pill also says that supply chain disruptions, which were worsened by Brexit, appear to have eased in recent months.

What is a recession? — video

The end of the zero-Covid policy in China this week could ease supply constraints, but the current surge in infection rates could “create its own disruption” to production, he cautions.

Furthermore, the tightening labour market, again influenced by Brexit and the impact of the free movement of EU workers into the UK, has had a bearing on inflation, Mr Pill says.

He concludes that both indicators will have to be watched closely by the bank.

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Timeline

2012-2015

The company offers payments/bribes to win key contracts in the Middle East

May 2017

The UK SFO officially opens investigation into Petrofac’s use of agents, corruption, and potential bribery to secure contracts

September 2021

Petrofac pleads guilty to seven counts of failing to prevent bribery under the UK Bribery Act

October 2021

Court fines Petrofac £77 million for bribery. Former executive receives a two-year suspended sentence 

December 2024

Petrofac enters into comprehensive restructuring to strengthen the financial position of the group

May 2025

The High Court of England and Wales approves the company’s restructuring plan

July 2025

The Court of Appeal issues a judgment challenging parts of the restructuring plan

August 2025

Petrofac issues a business update to execute the restructuring and confirms it will appeal the Court of Appeal decision

October 2025

Petrofac loses a major TenneT offshore wind contract worth €13 billion. Holding company files for administration in the UK. Petrofac delisted from the London Stock Exchange

November 2025

180 Petrofac employees laid off in the UAE

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BULKWHIZ PROFILE

Date started: February 2017

Founders: Amira Rashad (CEO), Yusuf Saber (CTO), Mahmoud Sayedahmed (adviser), Reda Bouraoui (adviser)

Based: Dubai, UAE

Sector: E-commerce 

Size: 50 employees

Funding: approximately $6m

Investors: Beco Capital, Enabling Future and Wain in the UAE; China's MSA Capital; 500 Startups; Faith Capital and Savour Ventures in Kuwait

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This article is part of a guide on where to live in the UAE. Our reporters will profile some of the country’s most desirable districts, provide an estimate of rental prices and introduce you to some of the residents who call each area home. 

Essentials

The flights
Whether you trek after mountain gorillas in Rwanda, Uganda or the Congo, the most convenient international airport is in Rwanda’s capital city, Kigali. There are direct flights from Dubai a couple of days a week with RwandAir. Otherwise, an indirect route is available via Nairobi with Kenya Airways. Flydubai flies to Kinshasa in the Democratic Republic of Congo, via Entebbe in Uganda. Expect to pay from US$350 (Dh1,286) return, including taxes.
The tours
Superb ape-watching tours that take in all three gorilla countries mentioned above are run by Natural World Safaris. In September, the company will be operating a unique Ugandan ape safari guided by well-known primatologist Ben Garrod.
In the Democratic Republic of Congo, local operator Kivu Travel can organise pretty much any kind of safari throughout the Virunga National Park and elsewhere in eastern Congo.

The specs: 2019 Infiniti QX50

Price, base: Dh138,000 (estimate)
Engine: 2.0L, turbocharged, in-line four-cylinder
Transmission: Continuously variable transmission
Power: 268hp @ 5,600rpm
Torque: 380Nm @ 4,400rpm
Fuel economy: 6.7L / 100km (estimate)

if you go

The flights
Emirates flies to Delhi with fares starting from around Dh760 return, while Etihad fares cost about Dh783 return. From Delhi, there are connecting flights to Lucknow. 
Where to stay
It is advisable to stay in Lucknow and make a day trip to Kannauj. A stay at the Lebua Lucknow hotel, a traditional Lucknowi mansion, is recommended. Prices start from Dh300 per night (excluding taxes). 

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Updated: January 10, 2023, 2:01 AM