The BoE will have to act on rates if there is evidence that higher inflation expectations influence wages – Andrew Bailey

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The Governor of the Bank of England, Andrew Bailey, has stated that the BoE will have to act with rates if there is evidence that higher inflation expectations influence wages.

“What we’re concerned about … is that once you start to get an inflation surge of this kind we want to prevent it from spreading across the economy,” Bailey said during an online question-and-answer session hosted by the BoE on Monday. , as reported by Reuters.

Bailey said there was a risk of more bottlenecks in the economy, especially in demand for labor, which could fuel expectations of higher inflation. ‘

“And that is why we would have to act on interest rates if we see that this evidence is clear,” said the BoE governor.

Bailey’s key comments

Much of the rise in inflation has to do with the reopening after the lockdowns.

The problem now is that what is driving inflation up is not too much demand.

The risk is that we are going to have more bottlenecks, especially for the labor sector.

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