Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Bank of England will have to act to contain inflation - Bailey

EconomyOct 17, 2021 16:00
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. FILE PHOTO: Bank of England Governor Andrew Bailey poses for a photograph on the first day of his new role at the Central Bank in London, Britain March 16, 2020. Tolga Akmen/Pool via REUTERS

LONDON (Reuters) -Bank of England Governor Andrew Bailey sent a fresh signal on Sunday that the British central bank is gearing up to raise interest rates for the first time since the onset of the coronavirus crisis as inflation risks mount.

Bailey said he continued to believe that the recent jump in inflation would be temporary, but that a surge in energy prices would push it higher and make its climb last longer, raising the risk of higher inflation expectations.

"Monetary policy cannot solve supply-side problems - 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," Bailey said during an online panel discussion organised by the Group of 30 consultative group.

"And that's why we at the Bank of England have signalled, and this is another such signal, that we will have to act," he said. "But of course that action comes in our monetary policy meetings."

The BoE has forecast that Britain's inflation rate will go over 4%, more than double its target, as the world economy reopens from its COVID-19 lockdowns, causing shortages of supplies and staff, and the price of energy soars.

Investors are speculating that the BoE might become the first of the world's biggest central banks to raise rates, later this year or early in 2022.

Bailey said demand for workers in Britain had been stronger than expected and the number of younger and older workers leaving the labour market had grown.

"I do have concerns about labour supply growth," he said.

But Bailey said he did not believe there was a "general pattern of labour market pressure" as wages climbed strongly in some sectors but less so in others.

He also said there were lessons for governments seeking to prevent future supply chain shocks in the way financial regulators had responded to the shock of the global financial crisis of 2007-09, including regular stress tests.

"I'm not saying we have the magic answer to supply chains across the board, but I think there are lessons that we have learned in terms of resilience that can usefully be adapted and used and translated into some other markets, particularly for instance when I look at energy supply," he said.

Bank of England will have to act to contain inflation - Bailey
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (9)
Pete Thompson
Pete Thompson Oct 20, 2021 12:18
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Governments across EU and most definitely the UK have been keeping rates artificially low since 2008/9. More worrying is Debt levels here in the UK which are a ticking time bomb as we continue to live beyond our means as UK plc
Martin Wall
Martin Wall Oct 18, 2021 11:30
Saved. See Saved Items.
This comment has already been saved in your Saved Items
An increase would only take them back to pre scamdemic levels
Pedro Gonzalez
Pedro Gonzalez Oct 17, 2021 20:52
Saved. See Saved Items.
This comment has already been saved in your Saved Items
imagine 5% base rate...
Mark Quinn
Mark Quinn Oct 17, 2021 20:52
Saved. See Saved Items.
This comment has already been saved in your Saved Items
October '89 it was 15% so 5% is very easy to imagine
Martin Wall
Martin Wall Oct 17, 2021 20:52
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Bring it on
Mark Quinn
Mark Quinn Oct 17, 2021 20:36
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Just a natural progression for Boris's high wage economy. Higher Wages = Higher Prices = Inflation = Higher Interest Rates = Stronger Pound = Less Exports. Rinse and repeat until you reach recession.In Boris's magic beans economy everyone will earn Stg£60k, what could possibly go wrong.
FMGK Blue
FMGK Blue Oct 17, 2021 20:36
Saved. See Saved Items.
This comment has already been saved in your Saved Items
this will lead to WEAKER pound not stronger. If you don't increase the GDP but raise value of everything artificially the currency will be devalued vs its peers. This leads to higher unemployment as firms will delocalise their Jobs to India or elsewhere where wages are lower.
Jason Rich
Jason Rich Oct 17, 2021 20:33
Saved. See Saved Items.
This comment has already been saved in your Saved Items
The only inflation to be controlled by interest rate rises should be demand led inflation … runaway demand is not the issue here.Wage inflation has been called upon re min/living wage increases so additional inflation is a given for the time being.Cant imagine the fallout for those with mortgages … so low for so long … will be devastating for so many
Pedro Gonzalez
Pedro Gonzalez Oct 17, 2021 20:33
Saved. See Saved Items.
This comment has already been saved in your Saved Items
yep low mortgages have helped who...
Dave Cpfc
Dave Cpfc Oct 17, 2021 20:33
Saved. See Saved Items.
This comment has already been saved in your Saved Items
If there is not enough supply to meet demand then it becomes a demand issue. As they said they cannot increase supply therefore they have to reduce demand. Interest rates have been artificially low for 14 years.
jewel amin
jewel amin Oct 17, 2021 20:06
Saved. See Saved Items.
This comment has already been saved in your Saved Items
this can effect on gold any idea?
Martin Kago
Martin Kago Oct 17, 2021 19:49
Saved. See Saved Items.
This comment has already been saved in your Saved Items
we might see gbp going to the moon gbpjpy will buy over 500pips in just a short time
Canali Issa
Canali Issa Oct 17, 2021 19:49
Saved. See Saved Items.
This comment has already been saved in your Saved Items
GBPUSD can be bullish market..
mark twain
mark twain Oct 17, 2021 19:43
Saved. See Saved Items.
This comment has already been saved in your Saved Items
The problem is real inflation which is much higher than the CPI. Real inflation is what the UK people have to deal with and suffer from in the real economy. CPI is the figure the UK government uses to hide inflation so that the BoE can debase the currency to keep the housing bubble going and monetise reckless government spending.
Mark Wells
Mark Wells Oct 17, 2021 19:43
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Well summed up
Mohammad faisal Faisal
Mohammad faisal Faisal Oct 17, 2021 19:38
Saved. See Saved Items.
This comment has already been saved in your Saved Items
very good sir
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email