Bank of England Rate Setters Sound Alarm Over High Energy Costs

Bank of England rate setters Clare Lombardelli and Sarah Breeden expressed concerns about unrelentingly high energy costs, which they believe increase the risk of inflation getting stuck at high levels.

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 behaviour begin to adjust in response.'

Breeden used a metaphor to describe the situation, saying 'the more sparks we're throwing in the tinderbox, the more likely we might have to turn the hose on it.'

The Bank of England has not followed other major central banks like the US Federal Reserve and European Central Bank by raising interest rates. However, they warned last week that they might follow suit if the Iran war drags on.