Bank of England chief warns that “we must act” to curb inflation

The Bank of England Governor warned on Sunday that he “must act” to curb inflationary pressures and did not attempt to contradict the movements in financial markets that priced the first rate hike by the end of the year.

Speak from home Inflation in the UK has already risen and will rise further in a way that justifies action to curb inflation in the medium term, Andrew Bailey told the G30 group of central bankers.

Excite rhetoric first budget And the next forecast by the BoE on November 4 showed that his concerns about inflation during the current energy crisis increased.

The governor stuck to his long-standing view that the rise in inflation, which jumped to 3.2% in August, was ultimately “temporary,” but said a significant price increase would continue until next year.

“What is an energy story? [the period of high inflation] It will last a long time, “he said.

He said BoE couldn’t do anything Initial price of energy rises And hit products Supply chain disruption, The Monetary Policy Committee, which sets interest rates, was increasingly concerned about rising prices that would raise “medium-term inflation and expectations for medium-term inflation.”

“That’s why we signaled at the Bank of England. This is another signal we have to act on,” Bailey said. “But of course, that action will come at our monetary policy conference,” he added.

In less than a month, financial market participants expected that the first rise in interest rates from banks would not come by the summer of 2022, but price increases and rhetoric from central banks. The date has been moved forward due to the increase in production of.

The majority of people trading in the overnight index swap market foresee BoE interest rates and expect the first rise from 0.1% to 0.25% at this December meeting.

Few think that the BoE will move as early as the November meeting, as most of the committees have stated that they want to wait until there is sufficient evidence of its effectiveness. Termination of temporary dismissal scheme Before taking action.

Britain’s new inflation rate was announced this Wednesday, with economists expecting interest rates to remain at 3.2% before they surge to above 4% at the end of the year.

Bailey said that one of the main reasons for rising inflation is that consumers are still demanding goods rather than shifting to spending money on services, and this increase in demand and supply chains He said the problems combined led to higher prices.

He added that these changes in consumption patterns are combined with a decline in the number of motivated and capable people to work, as young people remain educated at the same time as rising turnover rates.

“I’m concerned about labor supply growth,” he said.

But he added that he did not believe that the UK economy still had a “general pattern of labor market pressure.”

Bank of England chief warns that “we must act” to curb inflation

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