(Reuters) – Inflation running above the Bank of England’s target of 2.0 percent is very concerning and it has to be managed to prevent it from becoming permanently embedded, the bank’s governor, Andrew Bailey, said in an interview to The Yorkshire Post newspaper.
“We are going to have a very delicate and challenging job on our hands so we have got to in a sense prevent the thing becoming permanently embedded because that would obviously be very damaging,” Bailey was quoted as telling the newspaper.
“Unfortunately, if you look at our last forecast, it is going to go higher, I am afraid.”
Bailey’s comments appeared to favour the more hawkish side of the debate around the outlook for interest rates in Britain, despite growing signs of a slowing economy.
Financial markets have already priced in a roughly 90% chance of a rate hike before the end of the year.
The governor told the newspaper that with the pandemic having altered consumer behaviour, the economy had a whole range of challenges that had to be dealt with.
“We have got some very big and unwanted price changes,” he said.
(Reporting by Bhargav Acharya in Bengaluru and Andy Bruce in London; Editing by Sandra Maler)
