• UK inflation data due on Wednesday
• BoE, Reuters poll both predict sharp fall in UK inflation
• BoE chief economist: inflation outlook 'finely balanced'
• Says wage growth still too strong

BRISTOL, England, Nov 14 (Reuters) - The Bank of England's chief economist Huw Pill said there was still a risk that inflation would stay at high levels despite an expected fall in figures due on Wednesday, while fresh wage growth data remained too strong.

Nearly two weeks after the BoE held interest rates at a 15-year high and said it was not close to cutting them despite a flat-lining of the economy, Pill said the outlook for inflation was "finely balanced".

Last week, he said bets in financial markets that a first rate cut might come in August next year were not "totally unreasonable". But on Tuesday he sought to stress that the fight against inflation was far from over.

"We did have this morning the latest official data on pay growth in the UK with pay growing at 7.7%. And that's a little bit off where it was," Pill said at a discussion about central banks at the Bristol Festival of Economics 2023.

"But actually over the summer pay growth has remained very strong and we certainly wouldn't see pay growth of that rate as consistent with achieving the 2% inflation target on an ongoing basis."

Pill also said a fall in inflation to the BoE's forecast of just under 5%" on Wednesday would still be "much too high" even if it halved inflation over the past year.

Both the BoE and the consensus of economists polled by Reuters predict a sharp fall in inflation for October to 4.8% from 6.7% in September.

PERSISTENCE

"If you ask me where I think the sort of risk to the risks is, it's probably still on the fact that we may be seeing more momentum and more persistence than really is ideal to get us back to the 2% inflation target," Pill said.

The former Goldman Sachs economist repeated comments he made last week that the BoE did not necessarily need to raise rates further to restrain inflation but it was prepared to do so if necessary.

He also challenged the view that the impact of the BoE's rate hikes has been blunted by the fact that many mortgage-holders have yet to see their bills go up when they renew, saying people would adjust their spending before refinancing.

Another BoE rate-setter Swati Dhingra, who has voted against rate rises or for smaller increases than her colleagues since she joined the Monetary Policy Committee last year, said she was "a bit reassured" that inflation was heading down.

"Let's just hope that tomorrow looks good given that we are expecting a big drop. That would make me a feel a lot more confident," she said on the sidelines of the same conference.

But Dhingra said it was too early to say whether rate cuts should be on the table.

"A lot more homework will be needed" to make that kind of decision, she said.

https://www.reuters.com/world/uk/boes-pill-says-pay-growth-is-slowing-still-too-high-2023-11-14/