UK will face worse inflation than other major economies, says Bank governor
Britons should expect to suffer a more severe bout of inflation than other major economies during the current energy crisis, the governor of the Bank of England has warned.
Speaking at a conference of central bankers in Portugal, Andrew Bailey said inflation was higher in the UK and would persist for longer than previously expected as soaring petrol and gas prices sent household bills rocketing to new highs.
Bailey said he was determined to bring down inflation and was prepared to use the Bank’s power to increase interest rates aggressively in response, though he added that it may not be necessary if price growth slowed towards the end of the year. “I think the UK economy is probably weakening rather earlier and somewhat more than others,” he said. “There will be circumstances in which we will have to do more. We’re not there yet in terms of the next meeting. We’re still a month away, but that’s on the table. But you shouldn’t assume its the only thing on the table – that’s the key point,” he added.
His comments came as leaders of the world’s most powerful central banks warned that the global economy is facing a new period of persistently high inflation, unleashed by the coronavirus pandemic after decades of stability.
The heads of the US Federal Reserve and European Central Bank joined Bailey in saying that the era of low and stable inflation across advanced economies since the 1990s was unlikely to return in the wake of a succession of economic shocks.
Christine Lagarde, the head of the ECB, said there were “forces that have been unleashed” by the Covid pandemic, Russia’s war in Ukraine and the breakdown of global supply chains that made the return to a world of low and stable inflation difficult to achieve.
“I don’t think
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