Bank of England Governor: The interest rates will continue to rise if high inflation continues
Bank of England Governor Andrew Bailey said that the bank will raise interest rates again if consumer prices continue to rise in Britain.
Bank of England Governor Andrew Bailey’s remarks came one day after the Bank of England’s decision to increase the main interest rate by 25 basis points, to 4.25%.
Bailey called on companies and people who set prices to note the expectation of a sharp decline in inflation at the beginning of this year.
Bailey added in an interview with the BBC, “If all prices try to outpace inflation, the inflation rate will go up… Please understand, if the inflation rate goes up, then interest rates will go up even more, and high inflation really doesn’t help anyone… It harms people and it mainly harms the lower income groups of society.”
Bailey said that sharply lower energy prices will lead to lower inflation in the coming months, but added that the Bank of England should see that these declines are reflected in the official data and that price pressures recede.
This comes at a time when the cost of living rose unexpectedly in Britain last February, after a shortage of vegetables led to a rise in food prices to their highest level in 45 years.
The inflation rate rose to 10.4% in February, compared to 10.1% in January.
Prices of clothing, especially children’s and women’s clothing, rose last month, but fuel prices continued to fall.
The bank is scheduled to issue a decision to increase, reduce or maintain interest rates at their current level, in light of its continued confrontation with inflation.
One of the main reasons for the high inflation rate last month is the continued rise in food prices, at a time when shops faced a shortage of varieties of vegetables.
Tomatoes, peppers and cucumbers were among the vegetables that were not sufficiently available, largely due to bad weather affecting harvests in Spain and North Africa.
In addition to vegetable shortages, high energy prices have hit Britain’s farmers, as well as problems with supply chains.