U.K. Growth Boosts Case for Rate Rise, Bank of England's Pill Says

Dow Jones
08/13

Resilient economic growth in the U.K. in the second quarter adds support for the Bank of England to raise rates to combat inflation, its chief economist said.

Huw Pill has been calling for higher rates but been outvoted by a majority on the central bank's monetary policy committee who wanted to keep them on hold, most recently in a 6-3 vote.

Thursday's GDP growth figure of 0.4% quarter-on-quarter-equivalent to 1.6% annualized-puts the U.K. slightly ahead of the U.S. and other leading industrialized economies for the second consecutive quarter. Goldman Sachs raised its forecast for third-quarter growth as a result.

"This goes in the direction of reassuring me that we're not entering a sharp downturn," Pill said in an interview.

But inflation has been well above target, and is expected to rise further this year as higher energy costs feed through into domestic bills.

"We've had 59 months of data in my time as a member of the MPC, of which three months have been at or below target," he added. "It matters to me."

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