Bank of England Chief Economist: Policy Too Fast; Inflation Lags at 2.5pc

The Bank of England’s chief economist, Huw Pill, said the MPC made an error by cutting interest rates too far and too fast, contributing to persistently higher inflation than expected. Since 2022, inflation reached 11.1% in October 2022, peaked, and the base rate was cut to 3.6% as of February 2026. Pill warned headline inflation (excluding Budget measures) is running at 2.5%, not 2.0%, and underlying inflation may not reach the target until 2026. “This suggests we should have been setting policy through the middle of 2024 to hit 2pc in the middle of 2026,” Pill said. He voted against rate cuts at the February meeting and advocates for higher rates or greater caution. The Bank projects inflation will fall to 2pc with support from energy bill measures announced in the November 2025 Budget. Markets expect two more cuts this year, bringing the base rate to 3.25%.