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Inflation concerns mount as BoE mulls May 4th rate hike

The Bank of England's chief economist, Huw Pill, has hinted at the possibility of further interest rate rises in May as the Central Bank focuses on returning inflation to target levels.

Speaking in Geneva, Pill said that caution is still required, despite the expected fall in headline inflation over the course of the year due to base effects and energy price falls.

He also stressed the need for the MPC to remain vigilant and be prepared to respond to tightening financial conditions.


BoE has yet to buck the trend

Last month, the Central Bank raised interest rates in the UK after inflation unexpectedly accelerated to 10.4 percent, exceeding the 9.9 percent forecast by economists.

However, there are concerns that the swift rise in rates may cause more trouble in the banking sector. The collapse of Silicon Valley Bank and the resulting "shotgun marriage" of UBS and Credit Suisse to save the latter from collapsing have all been blamed on the speed of interest rate rises in the US.

In their most recent meeting, the MPC noted that there have been "large and volatile" moves in global financial markets since the collapse of SVB, reflecting market concerns of the possible broader impact of these events.

Nevertheless, the BoE's financial policy committee, which has briefed the MPC, said the UK banking system maintains robust capital and strong liquidity positions.