The Chief Economist at the Bank of England talks about inflation and the neutral rate.

The Chief Economist of the Bank of England, Huw Pill, made some comments on Tuesday regarding the trajectory of inflation and interest rates in the upcoming period. The key statements from the British official are as follows:

• There is still some work to be done regarding core inflation pressures in the UK.
• Data from the labor market released today shows that wage growth remains at elevated levels.
• The Bank of England is likely to adopt a gradual approach in continuing its interest rate reduction cycle.
• Global economic shocks may steer the UK away from a low inflation path.
• The core economic growth of 0.3% - on a quarterly basis - in the UK is not far from the growth trend.
• The Bank of England's monetary policy may be distant from the process of monetary policy adjustment to record neutral interest rates.
• Higher neutral interest rates in the UK are not the Bank of England's baseline case but are something to consider.
• It is not surprising that markets are also considering the possibility of rising neutral interest rates in the UK.