BoE’s Bailey says inflation above target is concerning -Yorkshire Post

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(Businesshala) – Inflation running above the Bank of England’s target of 2.0% is very worrying and must be managed to prevent it from becoming permanently embedded, the bank’s governor Andrew Bailey said in an interview with the Yorkshire Post newspaper. said in.

FILE PHOTO: Bank of England Governor Andrew Bailey poses for a photo on the first day of his new role at the Central Bank in London, Britain March 16, 2020. Tolga Ekmen/Pool via Businesshala/File photo

“We will have a very delicate and challenging task on our hands, so we have to stop this thing from becoming permanently embedded because it would obviously be very damaging,” Bailey told the newspaper.

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“Unfortunately, if you look at our previous forecast, it’s going to be more, I’m afraid.”

Despite growing signs of a slowing economy, Bailey’s comments appeared to favor the more fierce side of the debate about the outlook for interest rates in Britain.

The financial markets have already priced in about a 90% chance of a rate hike before the end of the year.

The governor told the newspaper that with the change in consumer behavior due to the pandemic, the economy faced a number of challenges that had to be dealt with.

“We’ve got some really big and unwanted price changes,” he said.

Bailey said pricing in the energy market indicates inflation will prove less transient than the BoE originally anticipated.

The price cap on consumers’ energy tariffs set by the regulator is expected to rise again next year.

Bailey said, “There could be a huge amount between now and then, so I’m not going to speculate, but for the time being the forward curve would suggest that it would be higher so as to suggest the persistence of inflation, hence the transitivity.” will be long.”

He also said there were more people on the government’s job retention furlough scheme when it ended last month than the bank expected.

Reporting by Bhargava Acharya in Bengaluru and Andy Bruce in London; Additional reporting by James Davey; Editing by Sandra Maler and Jason Neely

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