The Bank of England’s chief economist said on Monday that a ‘distinctive context’ within the UK creates the potential for inflation to prove ‘persistent.’

At a speech in New York, Huw Pill said that inflation in the UK is ‘too high’ and that returning UK inflation to its 2% target on a ‘lasting and sustainable basis’ was ‘essential’.

The chief economist explained that a ‘distinctive context’ within UK of higher natural gas prices, a tight labour market, adverse labour supply developments and goods market bottlenecks creates the potential for inflation to be ‘more persistent.’

‘It is therefore in this nexus that I focus in coming to my own assessment of the risks surrounding inflation persistence, which – consistent with the [monetary policy committee]’s collective communication – will strongly influence my monetary policy position in the coming months,’ he added.

Pill said that the monetary policy committee will ‘continue to act as necessary’ to ensure the Bank of England’s 2% inflation target is met on a ‘lasting basis over the medium term’.

‘There should be no question about what the MPC is seeking to achieve or whether it is prepared to take the necessary actions to do so,’ he said.

Last month, the Bank of England raised UK interest rates by 50 basis point to 3.5%.

Six members backed the half a percent hike, while Swati Dhingra and Silvana Tenryro backed no change and Catherine Mann favoured a larger 75 basis point hike.

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