Source: Sharecast
In a speech to the Institute of Chartered Accountants of England and Wales’ annual conference, Huw Pill acknowledged inflation had proved "stickier" than the Monetary Policy Committee had initially anticipated.
Consumer price inflation currently stands at 3.8%, above the bank’s long-term target of 2%, and is expected to tick up further in September to 4%.
Economists, including those on the MPC, are divided as to the cause of the UK’s stubbornly high inflation rate, however.
Some believe it has largely due to one-off factors, such as hikes in energy and food prices, that are expected to be short-lived. They also point to a loosening labour market, which will stem wage growth.
But others, including Pill - one of the MPC’s most hawkish members - argue that CPI is more closely affected by stickiness in services price inflation and historically still-high wage growth.
Pill told attendees: "The greater weight I have placed on stronger structural inflation persistence has led me to dissent from the committee’s decision on several occasions, in favour of a slower, more cautious pace of Bank Rate reduction."
He concluded: "All this supports my view that the MPC should adopt, from this point forward, a more cautious pace in withdrawing monetary policy restriction, so as to ensure continuation in disinflation towards the 2% target.
"The need to recognise the stubbornness of inflationary pressures is becoming more pressing.
"All-in-all, while I would expect further cuts in Bank Rate over the coming year, should the economic and inflation outlook evolve broadly as the MPC expects, it will continue to be important to guard against the risk of cutting rates either far or too fast."
The BoE has so far cut Bank Rate three times this year, to 4%. Pill voted against the last 25 basis point cut, in August.
The MPC next meets on 6 November.
