Bailey Warns High Energy Prices Threaten Rate Stability

The Governor of the Bank of England, Andrew Bailey, has stated that high energy prices will make it increasingly difficult to maintain interest rates at their current levels. This comes just a day after a deputy governor said a rate hike is looking 'increasingly likely' if energy prices remain elevated.

Bailey noted that while the Bank has so far seen subdued pass-through from energy price shocks, this will change if prices remain high. He emphasized that it's going to get harder to maintain current interest rates as energy prices stay higher.

The inflation outlook remains uncertain, with households set to witness a 4% rise in the energy price cap next week. Economists predict that the central bank may increase interest rates later this year to help bring inflation down to its target level of 2%.