Mohamed El-Erian said the Bank of England needs help from the UK government and others in bringing inflation down from double digits.
(Bloomberg) — Mohamed El-Erian said the Bank of England needs help from the UK government and others in bringing inflation down from double digits.
The former chief executive officer at the bond fund Pimco told BBC Radio 4 that the central bank has “no choice” but to raise interest rates again Thursday and perhaps again in June.
Asked whether he agreed with the BOE’s Chief Economist Huw Pill that British people need to accept the country is poorer, El-Erian said:
“He’s got a point, but I would have put it very differently.
I would have said that whatever the Bank of England does is necessary but not sufficient. We need help from elsewhere.”
He noted UK inflation is twice as high as it is in the US and also above levels in the eurozone.
That, he attributed to three reasons that require government intervention.
“Our productivity has been lagging, our labor market is less flexible, and we decided to rewire our international relationships after Brexit,” he said.
“These are things the Bank of England cannot do, and it needs a lot more help from other government agencies in order to make its job easier.”
A Bloomberg Opinion columnist, El-Erian is currently president of Queens’ College, Cambridge and the chief economic adviser for Allianz SE.
“The case for a rate rise is very simple: inflation remains too high,” he said on the BBC’s Today program.
“There’s evidence that inflationary pressures are persistent. And we have to follow the Fed.
“When you put all those things together, I would argue the Bank of England has no choice but to raise interest rates, and that’s what the market is priced for.
It wouldn’t surprise me if we get another rate increase in June.”
Read more:
- Expected BOE Rate Hike Could Set Stage for Pause: Decision Guide
- BOE Chief Economist Says UK Needs to Accept It’s Worse Off
- Sushil Wadhwani Says a BOE Rate Rise to 5% Would Be ‘Unwise’
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