Huw Pill, chief economist at the Bank of England, said that further tightening of monetary policy is required to combat high inflation, but it is necessary to act with caution to ensure that the country's economy does not fall into a recession.
Figures from the Office for National Statistics (ONS) showed that consumer price growth accelerated to 9% per annum in April from 7% per annum in March, but was weaker than economists' forecasts (+9.1%). However, the latest value was the highest in the last 40 years, and is likely to force the Bank of England to act more aggressively in terms of tightening monetary policy. On a monthly basis, consumer prices jumped by 2.5% after rising 1.1% in March. Consensus estimates suggested an increase of 2.6%.
"Given that inflation, according to the forecasts of the Bank of England, will continue to rise, and the growth rate of the economy is likely to slow down amid the cost of living crisis, there are risks if the Central Bank acts too slowly or too quickly," Pill said.