April 17 (Reuters) - Bank of England Chief Economist Huw Pill on Friday criticised calls for the central bank to "wait and see" how the Iran war pans out before changing policy. Pill said a wait-and-
Bank of England chief economist criticises colleagues' 'wait and see' messaging
Chief Economist Huw Pill's Perspective on Monetary Policy
By Andy Bruce and Suban Abdulla
Criticism of 'Wait and See' Approach
April 17 (Reuters) - Bank of England Chief Economist Huw Pill on Friday criticised his colleagues' "wait and see" messaging on keeping policy on hold while the Iran war plays out, and said tackling inflation should be its main focus against other trade-offs.
Contrast with Governor Andrew Bailey's Stance
His comments contrasted with those of BoE Governor Andrew Bailey, who said this week that the central bank should not "rush to judgements" in setting policy.
Bailey told Reuters this month that the BoE needed to keep a clear eye on risks to growth and jobs as well as inflation when making their next decision on rates.
Pill's Concerns About Policy Communication
Pill said a wait-and-see approach could be mistaken for looking neutral on the threat of higher inflation, even if holding interest rates represents a tightening of policy against previous assumptions of interest rate cuts.
Potential Risks of Inaction
"If you're waiting and seeing and you don't see, then you've just waited," Pill told a roundtable event hosted by Barclays.
"And I'm not sure waiting is necessarily the appropriate response to the sort of inflationary dynamics which have the potential, at least, to have some self-sustaining momentum."
Need for Clearer Communication from the MPC
He said the Monetary Policy Committee needed to be clearer that it had held interest rates because that was the appropriate level of monetary tightness for the economy, not because it was simply waiting and seeing.
Background and Pill's Policy Priorities
Before the start of the war in Iran in late February, Pill had consistently argued for a slower pace of interest rate cuts, citing reservations about the persistence of inflation pressure in Britain's economy.
He said on Friday that tackling this should be the BoE's top priority.
Emphasis on Inflation Targeting
"In my thinking, for all the discussion about trade-offs, which is there and we have to take into account, I think the primacy of keeping inflation towards target and keeping it there needs to be emphasised," Pill said.
Market Reaction
Investors on Friday moved to price in only one BoE quarter-point interest rate hike after Iran said the Strait of Hormuz would open during the current ceasefire, from between one and two on Thursday.
(Reporting by Andy Bruce; Editing by Muvija M)
