Huw Pill: Inflation is a 'wicked problem'

Introductory remarks by Mr Huw Pill, Chief Economist and Executive Director for Monetary Analysis of the Bank of England, at the Warwick Think Tank, University of Warwick, Coventry, 16 February 2023. 

The views expressed in this speech are those of the speaker and not the view of the BIS.

Central bank speech  | 
17 February 2023

Accompanying slides of the speech. 

Good evening everyone. It is a great pleasure to be here at the Warwick Think Tank today. Thanks to the organisers for the invitation to participate.

I am sure that you have many questions about the outlook for the UK economy. We all do. I am looking forward to discussing those in a moment. But before we turn to that discussion, I thought I would kick-off with a few remarks about the framework within which monetary policy works.

The first thing to say is that the objective of monetary policy in the UK is very clear.

The Bank of England's Monetary Policy Committee (MPC) has the objective of price stability. Through achieving price stability, monetary policy creates an environment in which firms and households can make the longer-term plans and investment decisions that generate the innovation, dynamism and productivity that ultimately drive growth and prosperity.

Price stability has been operationalised in the form of an inflation target of 2% for the consumer price index (CPI). This target holds at all times. The MPC therefore needs to achieve this target on a sustainable basis: it is not a target for one moment or horizon, but must be achieved on an ongoing basis over the medium term.

While we have seen some easing in the past couple of months as the impact of past energy price rises starts to recede, UK CPI inflation is still in double digits. That is unacceptably high.

In line with its mandate, the MPC has taken action to bring inflation back to the 2% target on a sustainable basis.