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
Bruce Willis Relocated Due to Advanced Dementia
French and Korean Nuclear Majors Clash As EU Launches Foreign Subsidy Probe
EU Stands Firm on Digital Rules as Trump Warns of Retaliation
Getting Ready for the 3rd Time in Its History, Germany Approves Voluntary Military Service for Teenagers
Denmark Confronts U.S. Diplomat Over Covert Trump-Linked Influence in Greenland
Trump Demands RICO Charges Against George Soros and Son for Funding Violent Protests
Taylor Swift Announces Engagement to NFL Star Travis Kelce
France May Need IMF Bailout, Warns Finance Minister
After the Shock of Defeat, Iranians Yearn for Change
Ukraine Finally Allows Young Men Aged Eighteen to Twenty-Two to Leave the Country
The Porn Remains, Privacy Disappears: How Britain Broke the Internet in Ten Days
YouTube Altered Content by Artificial Intelligence – Without Permission
Ukrainian Refugee Iryna Zarutska Fled War To US, Stabbed To Death
Elon Musk Sues Apple and OpenAI Over Alleged App Store Monopoly
German Chancellor Friedrich Merz: “The Current Welfare State Can No Longer Be Financed”
HSBC Switzerland Ends Relationships with Over 1,000 Clients from Saudi Arabia, Lebanon, Qatar, and Egypt
Sharia Law Made Legally Binding in Austria Despite Warnings Over 'Incompatible' Values
Dutch Foreign Minister Resigns Amid Deadlock Over Israel Sanctions
Trump and Allies Send Messages of Support to Ukraine on Independence Day Amid Ongoing Conflict
China Reels as Telegram Chat Group Shares Hidden-Camera Footage of Women and Children
MotoGP Cameraman Narrowly Avoids Pedro Acosta Crash at Hungarian Grand Prix
Wizz Air passengers screamed as storm-battered flight diverts to Bologna
European postal services halt U.S. deliveries after Trump imposes new tariffs
Urban explorer finds abandoned luxury restaurant left to decay
Fidesz leader labels Péter Magyar a ‘bluffer’ amid escalating political spat
French rope park operator arrested for denying entry to Israeli children
Újpest thrashes Zalaegerszeg 4-1 to secure first win in five matches
Profit-margin cap costs retailers 13 billion forints a month, warns trade group
Curiosity rover finds coral-like rock on Mars hinting at watery past
U.S. green policy rollback drives investors to Europe’s sustainable finance market
Special funerals rise in Hungary: boat, aerial and forest burials gain popularity
Hungary’s Kiskunság region turning into semi-desert after extreme drought
Kopasz Bálint wins world kayak 1000 m title in Milan, making him triple world champion
Budapest’s Keleti railway station to close for four weeks for track overhaul
Balaton could be unfit for swimming by 2035 and dry by 2050, scientists warn
Leaked guidelines show Meta’s AI allowed flirty and racist interactions with children
Filming of ‘Emily in Paris’ halted after assistant director dies on set
Filipino guest workers sue after Hungary moves to deport them for pregnancy
Ukraine Declares De Facto War on Hungary and Slovakia with Terror Drone Strikes on Their Gas Lifeline
A monster hit and a billion-dollar toy empire
Animated K-pop Musical ‘KPop Demon Hunters’ Becomes Netflix’s Most-Watched Original Animated Film
Canada: Nurse Suspended and Fined 93 Thousand Dollars After Stating the World’s Most Well-Known Fact Since the Creation of Adam and Eve, That There Are Only Two Genders
Elon Musk tweeted, “Europe is dying”
Far-Right Activist Convicted of Incitement Changes Gender and Demands: "Send Me to a Women’s Prison" | The Storm in Germany
Hungary Criticizes Ukraine: "Violating Our Sovereignty"
Will this be the first country to return to negative interest rates?
U.S. Treasury Secretary Whitney Bessent Backs Stablecoins to Boost Treasury Demand
Spain to Declare Disaster Zones After Massive Wildfires
Three-Minute Battery Swap Touted as Future of EVs
Beijing Military Parade to Showcase Weapons Advances
×