Bank Deputy Warns Rate Rise Looming Amid Energy Price Pressure

A rise in interest rates by the Bank of England is becoming increasingly likely if energy prices stay high, according to Clare Lombardelli, a deputy governor at the central bank.

Lombardelli said during a speech in Warsaw that energy price pressure could drive rate-setters to tighten fiscal policy unless there is particular weakness in the economy.

The longer higher energy prices persist, the greater the risk that indirect effects build and that inflation expectations, wage bargaining, and price-setting behavior begin to adjust in response, Lombardelli stated.

She pointed out that it's not just the spot price of energy itself that matters, but rather how it interacts with the underlying economy and is transmitted through it.