New Covid variant is ‘punch in face’, says bank economist

Bank of England chief economist described new variants of coronavirus ‘as a slap in the face’

The chief economist of the Bank of England has described the new variants of the corona virus as “a slap in the face”.

Huw Pill, who joined the Bank in September, said the latest tensions and further lockdowns would “clearly change our view of the world”.

Quoting former heavyweight boxing champion Mike Tyson, he added: “Everyone has a plan until you get punched in the face.”

Concern: Economists have come to speculate fears over the Omicron variant could push a rate hike further

Pill’s comments, delivered in an online lecture hosted by the Confederation of British Industry (CBI), came as the discovery of a new strain of Covid – called Omicron – sent global markets into a panic.

The Bank of England was widely expected to raise interest rates from their record low ’emergency rate’ of 0.1 percent in December, when the next rate setters, including Pill, meet.

Pressure on civil servants has increased to deal with rising inflation or rising cost of living. Rate hikes are often used as a means of reducing overheating prices because they encourage households and businesses to save rather than spend.

But economists have begun to speculate that fears over the Omicron variant could push a rate hike further, while bank officials wait to see whether new lockdown restrictions will be imposed or whether consumers will become more cautious about their spending.

Pill said: “If there’s a financial disruption, or if another pandemic and lockdown kicks in, those are the kinds of events that would clearly change our view of the world. We don’t really know what the future holds.’