Bank of England chief economist doubts market forecast of four rate hikes by 2027

At a Citi-hosted forum on the sidelines of the IMF meetings in Bangkok, Bank of England chief economist Huw Pill expressed doubt about market projections of four additional 25-basis-point rate hikes by the end of 2027. He argued that while the Bank must be positioned to act, it is unclear whether four moves are warranted. The Bank has left the Bank Rate at 3.75%, making it the sole major central bank that has not raised rates this year despite inflationary pressures from the ongoing Iran war, oil prices above $100 a barrel, and UK energy bills projected to exceed £2,000 in January.

Governor Andrew Bailey recently warned that a prolonged Middle-East conflict could change the inflation picture. Pill’s remarks underscore a divergence between market pricing, which influences mortgage rates, and the Monetary Policy Committee’s more cautious stance. The comments come as other central banks, such as the US Federal Reserve and the European Central Bank, continue to tighten policy.