BoE Governor Andrew Bailey warned that rising energy prices means inflation will “last longer” and “get into the annual numbers for longer as a consequence.” The development raised the “fear and concern of embedded expectations.”
“Monetary policy cannot solve supply-side problems,” he noted. “But it will have to act and must do so if we see a risk, particularly to medium-term inflation and to medium-term inflation expectations”
“That’s why we, at the Bank of England have signaled, and this is another signal, that we will have to act”, he said. “But of course that action comes in our monetary policy meetings.”
