Bank of England Chief Economist Huw Pill said this week that uncertainty about the economic implications of the ongoing conflict ​in the Middle East should not be used as an excuse for inaction ‌over inflation threats.

Pill – who has previously said the BoE cut interest rates too fast over the past year – told a central banking conference in Skopje that he was ready to act “if necessary to contain ​the lasting components of any new inflationary pressures”.

“I see the upside risks to price ​stability mounting as a result of events in the Gulf,” Pill said ⁠in a text provided by the BoE.

“The fog of uncertainty in which we always operate ​cannot be an excuse for inaction,” he added at the event hosted by North Macedonia’s central ​bank.

Last week the BoE revised up its forecast for inflation to show it rising towards 3.5 per cent by the middle of the year, in contrast to its forecast before the conflict that inflation would return to near ​its 2 per cent target from April onwards.

In policy minutes of last week’s decision, Pill said it ​was unclear if rising market borrowing costs were enough to offset the inflation impact of higher energy ‌prices, ⁠and that he was “ready to act if they intensify”.

Financial markets currently price in almost three quarter-point BoE rate rises this year, in contrast to the cuts they expected before the conflict, though some economists think the headwinds to growth and a weak domestic labour market mean ​the BoE will keep ​rates unchanged.

BoE Governor Andrew ⁠Bailey last week said investors were getting ahead of themselves by betting on rate hikes.

Pill said he believed that changes in the British ​job market since the pandemic meant it put less downward pressure on ​inflation than ⁠before during times of economic weakness.

“I attach sufficient weight to the ‘structural change’ interpretation to conclude that propagation of both previous inflationary shocks and the new energy shock emanating from the Gulf is ⁠persistent ​enough to justify ‘caution’ in the conduct of monetary policy,” ​he said.

Rising energy prices represented a shock that would lower real incomes in Britain and exacerbate cost-of-living pressures, and ​were not something that the BoE could offset, he added.