Budapest Post

Cum Deo pro Patria et Libertate
Budapest, Europe and world news

UK will face worse inflation than other major economies, says Bank governor

UK will face worse inflation than other major economies, says Bank governor

Andrew Bailey said inflation would persist for longer than previously expected as petrol prices soar
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 that we’re going to go back to that environment of low inflation,” she said.

Speaking on a panel at the ECB’s annual policy forum in Sintra, Portugal, she said: “A lot of the movements we’ve experienced in the last 20 years were predicated on globalisation – on the breaking-down of supply chains, on the reduction of cost, on just-in-time. That has changed. And will probably change continuously towards a system we’re not certain about.”

Lagarde was joined on the panel by Bailey, the chair of the US Fed, Jerome Powell and Agustín Carstens, the head of the Bank for International Settlements.

Powell said the post-pandemic economy was being driven by “very different forces” from the past decade. “What we don’t know is whether we’ll be going back to something that looks more like, or a little bit like, what we had before. We suspect it will be kind of a blend.”

The Fed chair said it was raising interest rates with the express purpose of moderating the pace of growth in the world’s largest economy, as it attempts to deal with the fallout from severe supply bottlenecks and red-hot demand for goods and services driving up inflation.

“The aim of that is to slow growth down so that supply will have a chance to catch up. We hope that growth will remain positive,” he said.

Bailey said Covid had left a “structural legacy” in the UK jobs market, where companies have struggled with a lack of workers, while inflation would also be influenced by the remaking of international supply chains in response to geopolitical tensions and to deal with global heating.

Together representing more than a third of the world economy, and with more than $20tn (£16.5tn) of assets on their balance sheets, the central bank chiefs put borrowers on notice for aggressive rises in interest rates to combat soaring inflation.

Powell said it was the job of central banks to prevent a permanent transition to a “higher-inflation regime” after a string of shocks. “There’s a clock running here,” he said.

While warning that there were signs of slowing economic growth in Britain, Bailey did not rule out raising rates by 50 basis points at the Bank’s next meeting in August and said it had the option of taking forceful action. “

Giving evidence separately to the Commons Treasury committee, the economist Swati Dhingra, who joins the Bank’s nine-strong monetary policy committee (MPC) later this year, said the worsening outlook for growth had convinced her that a “gradual approach” to interest rates rises was needed.

At a hearing with MPs on the Treasury select committee to approve her appointment, the London School of Economics economist said she had been prepared to take a more aggressive approach to rate hikes until she saw the latest consumer confidence figures, which showed the largest decline in optimism on record.

“In hindsight, I think there is some room for a gradual approach,” she said. Three members of the MPC voted for a 0.5-percentage point rate rise in the central bank’s base rate to 1.5% at a meeting earlier this month, while the majority backed a more modest 0.25-point increase.
AI Disclaimer: An advanced artificial intelligence (AI) system generated the content of this page on its own. This innovative technology conducts extensive research from a variety of reliable sources, performs rigorous fact-checking and verification, cleans up and balances biased or manipulated content, and presents a minimal factual summary that is just enough yet essential for you to function as an informed and educated citizen. Please keep in mind, however, that this system is an evolving technology, and as a result, the article may contain accidental inaccuracies or errors. We urge you to help us improve our site by reporting any inaccuracies you find using the "Contact Us" link at the bottom of this page. Your helpful feedback helps us improve our system and deliver more precise content. When you find an article of interest here, please look for the full and extensive coverage of this topic in traditional news sources, as they are written by professional journalists that we try to support, not replace. We appreciate your understanding and assistance.
Newsletter

Related Articles

0:00
0:00
Close
The conservative right spreads westward: a huge achievement for 'Alternative for Germany' in local elections
Pope Leo Warns of Societal Crisis Over Mega-CEO Pay, Citing Tesla’s Proposed Trillion-Dollar Package
Poland Green-Lights NATO Deployment in Response to Major Russian Drone Incursion
U.S. and China Agree on Framework to Shift TikTok to American Ownership
Le Pen Tightens the Pressure on Macron as France Edges Toward Political Breakdown
Czech Republic signs €1.34 billion contract for Leopard 2A8 main battle tanks with delivery from 2028
Penske Media Sues Google Over “AI Overviews,” Claiming It Uses Journalism Without Consent and Destroys Traffic
Indian Student Engineers Propose “Project REBIRTH” to Protect Aircraft from Crashes Using AI, Airbags and Smart Materials
One in Three Europeans Now Uses TikTok, According to the Chinese Tech Giant
Could AI Nursing Robots Help Healthcare Staffing Shortages?
NATO Deploys ‘Eastern Sentry’ After Russian Drones Violate Polish Airspace
The New Life of Novak Djokovic
German police raid AfD lawmaker’s offices in inquiry over Chinese payments
Volkswagen launches aggressive strategy to fend off Chinese challenge in Europe’s EV market
France Erupts in Mass ‘Block Everything’ Protests on New PM’s First Day
Poland Shoots Down Russian Drones in Airspace Violation During Ukraine Attack
Apple Introduces Ultra-Thin iPhone Air, Enhanced 17 Series and New Health-Focused Wearables
Macron Appoints Sébastien Lecornu as Prime Minister Amid Budget Crisis and Political Turmoil
Vatican hosts first Catholic LGBTQ pilgrimage
Apple Unveils iPhone 17 Series, iPhone Air, Apple Watch 11 and More at 'Awe Dropping' Event
France joins Eurozone’s ‘periphery’ as turmoil deepens, say investors
France Faces New Political Crisis, again, as Prime Minister Bayrou Pushed Out
Nayib Bukele Points Out Belgian Hypocrisy as Brussels Considers Sending Army into the Streets
France, at an Impasse, Heads Toward Another Government Collapse
The Country That Got Too Rich? Public Spending Dominates Norway Election
EU Proposes Phasing Out Russian Oil and Gas by End of 2027 to End Energy Dependence
More Than 150,000 Followers for a Fictional Character: The New Influencers Are AI Creations
EU Prepares for War
Trump Threatens Retaliatory Tariffs After EU Imposes €2.95 Billion Fine on Google
Tesla Board Proposes Unprecedented One-Trillion-Dollar Performance Package for Elon Musk
Gold Could Reach Nearly $5,000 if Fed Independence Is Undermined, Goldman Sachs Warns
Uruguay, Colombia and Paraguay Secure Places at 2026 World Cup
Trump Administration Advances Plans to Rebrand Pentagon as Department of War Instead of the Fake Term Department of Defense
Big Tech Executives Laud Trump at White House Dinner, Unveil Massive U.S. Investments
Tether Expands into Gold Sector with Profit-Driven Diversification
‘Looks Like a Wig’: Online Users Express Concern Over Kate Middleton
Florida’s Vaccine Revolution: DeSantis Declares War on Mandates
Trump’s New War – and the ‘Drug Tyrant’ Fearing Invasion: ‘1,200 Missiles Aimed at Us’
"The Situation Has Never Been This Bad": The Fall of PepsiCo
At the Parade in China: Laser Weapons, 'Eagle Strike,' and a Missile Capable of 'Striking Anywhere in the World'
The Fashion Designer Who Became an Italian Symbol: Giorgio Armani Has Died at 91
Putin Celebrates ‘Unprecedentedly High’ Ties with China as Gazprom Seals Power of Siberia-2 Deal
China Unveils New Weapons in Grand Military Parade as Xi Hosts Putin and Kim
Rapper Cardi B Cleared of Liability in Los Angeles Civil Assault Trial
Google Avoids Break-Up in U.S. Antitrust Case as Stocks Rise
Couple celebrates 80th wedding anniversary at assisted living facility in Lancaster
Information Warfare in the Age of AI: How Language Models Become Targets and Tools
The White House on LinkedIn Has Changed Their Profile Picture to Donald Trump
"Insulted the Prophet Muhammad": Woman Burned Alive by Angry Mob in Niger State, Nigeria
Trump Responds to Death Rumors – Announces 'Missile City'
×