London, June 30 (BNA) The Governor of the Bank of England has warned that high inflation will harm Britain more than any other major economy during the current energy crisis.
Andrew Bailey said the UK economy is likely to weaken earlier and be more intense than others as a result of the energy price shock faced by all European economies, German news agency dpa reported.
The situation in Britain has been exacerbated by the “structural legacy” that Covid has left in the labor market as companies have been struggling with a shortage of workers.
“Unfortunately, there will be another rise in UK inflation later this year because this is a product of the way the energy price ceiling interacts with energy prices that we’ve observed over the past few months,” Bailey told Eurocenter. The Bank Conference (ECB) in Sintra, Portugal, on Wednesday.
“I think the UK economy is probably weakening somewhat earlier and somewhat more than others.”
The governor said that in the latest inflation data, he witnessed a shift in the causes of high inflation from high prices of goods that were in short supply after Covid-19, towards goods and services affected by the Russian-Ukrainian war.
To tackle inflation, the Bank of England needed the option to raise the interest rate by half a point.
“There will be circumstances in which we have to do more.
We are not there yet regarding the next meeting. We’re still a month away, but that’s on the table. But you shouldn’t assume that’s the only thing on the table – that’s the point.”
“The main thing for us is to bring inflation down to the target level and that’s what we will do.”
The Bank of England has raised interest rates so far five times since December.
FKN