Bank of England Official Warns of Interest Rate Rise Amid Energy Price Concerns

A senior Bank of England official has warned that interest rate rises are increasingly likely if energy prices remain high.

Clare Lombardelli, a deputy governor at the central bank, said during a speech in Warsaw that prolonged higher energy costs could lead to inflation expectations and wage bargaining rising.

Lombardelli stated that '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.'

The Bank of England has predicted that inflation will increase to around 3.7% in the fourth quarter of this year and 4.2% in the first quarter of next year.