Introduction: BoE chief economist warns against ‘complacency’ on inflation<\/p>\n
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.<\/p>\n
The Bank of England\u2019s chief economist is warning against complacency in the fight against inflation, after finding himself in a minority at this month\u2019s BoE interest rate vote.<\/p>\n
Huw Pill has told the Press Association that policymakers \u201cshould not be complacent\u201d about the current rate of inflation, after the Consumer Prices Index (CPI) remained over the Bank\u2019s 2% in May, at 2.8%.<\/p>\n
Pill argued that in the past, inflation running around one percentage point above target would have been seen as \u201cproblematic\u201d, adding:<\/p>\n
double quotation mark\u201cI think it should be seen as problematic, because our mandate is very clear; inflation at 2% at all times.\u201d<\/p>\n
\u201cI do fear a little bit that, because we saw inflation go to 11%, policy discussion becomes, \u2018oh inflation at 3% is not so bad\u2019.\u201d<\/p>\n
Two week\u2019s ago, the Bank\u2019s monetary policy committee split 7-2 when it voted to leave borrowing costs on hold<\/a>, with Pill and Megan Greene the lone voices for a hike in Bank rate.<\/p>\n Pill also appeared to criticise the six cuts in interest rate since August 2024, arguing that on balance monetary policy \u201chasn\u2019t been restrictive enough over the last few years.\u201d<\/p>\n City economists have been cutting their forecasts for UK interest rate rises in recent weeks, as tensions in the Middle East have cooled somewhat, and the oil price has fallen.<\/p>\n The City money markets are now only fully pricing in a rise in interest rates by next February \u2013 earlier this year, as many as three rises this year were priced in.<\/p>\n But the latest round of escalating strikes between Iran and the US last weekend<\/a> has shown that the peace deal will not be easy to secure.<\/p>\n As Pill puts it:<\/p>\n double quotation mark\u201cThe world is becoming more uncertain and becoming more complex,\u201d Mr Pill concluded.<\/p>\n \u201cWhat we can guarantee is that monetary policy is not adding to uncertainty, and I think that is where we should keep the focus.\u201d<\/p>\n The agenda<\/p>\n 9.30am BoE mortgage approvals and consumer credit data<\/p>\n 18.30pm BST: Christine Lagarde, president of the European Central Bank, gives speech at the ECB Forum on Central Banking 2026<\/p>\n Share<\/a><\/p>\n Key events<\/p>\n South Korea announces $590bn chipmaking expansion<\/p>\n Over in Korea, two of the country\u2019s chipmaking giants and the Seoul government have announced a massive manufacturing expansion costing more than half a trillion dollars, to address the shortages of AI chips.<\/p>\n President Lee Jae Myung pledged to cement South Korea\u2019s leadership in the industry with investments worth more than $576bn over several years covering semiconductors, AI data centres and robotics.<\/p>\n Under the plan, Samsung Electronic and SK Hynix will build a total of four fabrication plants in South Korea\u2019s southwest region.<\/p>\n Lee said:<\/p>\n double quotation mark\u201cWe must secure the core elements of AI faster than any other country.<\/p>\n Semiconductors, physical AI, and AI data centres are the triple axis for our great leap forward.\u201d<\/p>\n South Korea\u2019s stock market has more than doubled in value so far this year, thanks to the surge in demand for chips to power AI systems.<\/p>\n At the end of last week, Samsung\u2019s share price has jumped 183% so far this year, while SK Hynix had risen 310% since the start of January.<\/p>\n Share<\/a>Oil price rising after US-Iran attacks<\/p>\n The oil price is nudging higher, after the latest tit-for-tat military strikes between the US and Iran.<\/p>\n Brent crude is up almost 1% at $72.61 a barrel, having fallen to its lowest level since just before the confict began on Friday.<\/p>\n Oil prices are pushing. up after Tehran launched drone and missile attacks against Bahrain and Kuwait on Sunday after new US strikes<\/a> on sites in southern Iran.<\/p>\n Last night, a US official said both sides had agreed to \u201cstand down\u201d, which is probably helping the oil price from rising more sharply.<\/p>\n Share<\/a>Introduction: BoE chief economist warns against ‘complacency’ on inflation<\/p>\n Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.<\/p>\n The Bank of England\u2019s chief economist is warning against complacency in the fight against inflation, after finding himself in a minority at this month\u2019s BoE interest rate vote.<\/p>\n Huw Pill has told the Press Association that policymakers \u201cshould not be complacent\u201d about the current rate of inflation, after the Consumer Prices Index (CPI) remained over the Bank\u2019s 2% in May, at 2.8%.<\/p>\n Pill argued that in the past, inflation running around one percentage point above target would have been seen as \u201cproblematic\u201d, adding:<\/p>\n double quotation mark\u201cI think it should be seen as problematic, because our mandate is very clear; inflation at 2% at all times.\u201d<\/p>\n \u201cI do fear a little bit that, because we saw inflation go to 11%, policy discussion becomes, \u2018oh inflation at 3% is not so bad\u2019.\u201d<\/p>\n Two week\u2019s ago, the Bank\u2019s monetary policy committee split 7-2 when it voted to leave borrowing costs on hold<\/a>, with Pill and Megan Greene the lone voices for a hike in Bank rate.<\/p>\n Pill also appeared to criticise the six cuts in interest rate since August 2024, arguing that on balance monetary policy \u201chasn\u2019t been restrictive enough over the last few years.\u201d<\/p>\n City economists have been cutting their forecasts for UK interest rate rises in recent weeks, as tensions in the Middle East have cooled somewhat, and the oil price has fallen.<\/p>\n The City money markets are now only fully pricing in a rise in interest rates by next February \u2013 earlier this year, as many as three rises this year were priced in.<\/p>\n