Bank of England: Inflation Risks Remain Tilted Upward Amid Energy Price Volatility

The Bank of England has signaled that inflation risks remain tilted upward due to rising energy prices. Governor Andrew Bailey stated that the conflict in the Middle East is pushing energy prices higher, increasing volatility across financial markets.

Bailey emphasized that the main uncertainty lies in the direction of energy prices and whether those increases feed through into underlying inflation. He noted that the risks on the energy side are skewed upward.

The Bank's Monetary Policy Committee kept interest rates at 3.75 percent in July, despite inflation reaching 2.9 percent above its 2 percent target. The committee signaled that borrowing costs may still need to rise if inflation pressures prove more persistent.