By William Schomberg & David Milliken

LONDON (Reuters] – Bank of England officials tried Friday to reassure investors that they are sticking with plans to raise interest rate, a day following a surprise announcement by the central bank about a possible rate increase.

After plunging after Thursday’s announcement of no change, sterling and British bond yields dropped again. However, Huw Pill (BoE chief economist) stated that the Monetary Policy Committee saw “some need for” a rate increase with inflation at almost 5%.

Pill stated on Friday that he believes there is consensus among the members of the Committee about the necessity to act on the Bank Rate.

Pill was among the seven MPC members that voted for rates to remain at their current levels, less than two weeks after Andrew Bailey, BoE Governor, stated that the bank should act if there is any upward pressure on the medium-term rate outlook.

Despite the fact that most economists expected it in a Reuters poll, some investors complained about the BoE’s failure to communicate with markets.

Bailey stated his belief that rates will need to go up and rejected the notion that the bank lost its nerve. In an interview with BBC radio, Bailey stated that “We will not bottle it”

According to Thursday’s BoE policy statement, it stated in its latest policy statement that the Bank Rate would be raised from the 0.1% record low “overcoming months” if things go according to plan.

Pill stressed that the MPC was divided on the issue of the need for action.

Pill stated that he was not going to separate himself from Ramsden’s opinions when he spoke with BoE regional staff members in an online meeting. Ramsden cast one vote for the hike.

Pill claimed that the underlying wage growth in Britain had begun to exceed pre-pandemic levels. This contrasts with the United States and euro zone. But he said that “at the margins”, he was more worried about the recent slowdown in Britain’s economy.

Ramsden indicated that he was taking action now in order to address the rise in British inflation expectations.

Ramsden expressed concern about “that move in the UK higher, and more materially, than what was a fairly stable historical average,” Ramsden added.

Silvana Tenreyro, a fellow member of MPC spoke separately Friday. She said that the BoE must be cautious about raising rates because the economy is still smaller than it was before the crisis and the state of the labor market were difficult to understand.

Tenreyro stated that she wanted to see data about the effects of Britain’s furlough program ending. This programme was in place when 1 million people were on it, but ended on September 30.

Tenreyro stated that inflation expectations have risen despite the fact that energy prices were on the rise in 2008 and 2011, but not to persistent inflation.