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UK Inflation Shock Likely Worse Than Feared, Bank of England’s Top Economist Warns

  • Price pressures ‘substantial’ and more rate hikes needed
  • Risk of 2nd-round effects in wage and price setting ‘obvious’
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WATCH: Allianz’s Mohamed El-Erian says he admires  the BOE’s “brutal honesty” in its handling the UK’s economic challenges.Source: Bloomberg

Britain’s inflationary shock is likely to be worse than feared, Bank of England Chief Economist Huw Pill said as he warned price pressures were “substantial” and further interest-rate increases will be needed.

In a speech to the Association of Chartered Certified Accountants in Wales, Pill spelled out the dilemma the central bank faces as soaring inflation threatens both to become embedded in domestic price setting and depress growth by squeezing household incomes.