BoE Rate Setters Warn of Stuck Inflation Risk Amid Energy Crisis

Two senior Bank of England interest rate-setters suggested they are getting closer to voting for an increase in borrowing costs. Deputy Governors Clare Lombardelli and Sarah Breeden said high energy costs raise the risk of inflation getting stuck at high levels.

Lombardelli warned 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 noted that it's not obvious there is a path to lower energy prices. She also said indirect pass-through of energy price rises are limited so far, suggesting slack in the economy.