Felicity Evans

Bank of England chief economist Huw Pill warns that interest rates may need to rise this year to contain inflation, citing weaker economic capacity and persistent price pressures. He argues that UK productivity has slowed, with Wales facing particularly low productivity and wages, and says improvements in infrastructure and education are essential for long-term growth despite political and financial constraints. Reflecting on his experience during the Eurozone crisis, Pill notes that central bank tools are powerful but limited, and that structural reforms play a key role in strengthening economies.

Bank of England chief economist Huw Pill signaled that interest rates may need to rise in 2026 to curb inflation, citing persistent price pressures and lower economic speed limits. He noted prolonged periods of inflation above the 2% target and emphasized weak productivity, particularly in Wales, as a major obstacle to improving living standards. Pill reiterated that central bank tools are powerful but limited and pointed to the difficult choices faced by countries during the Eurozone crisis. He highlighted infrastructure and education as key drivers of productivity while acknowledging fiscal constraints.