BoE's Lombardelli Signals Rate Hike If Energy Prices Persist

Bank of England Deputy Governor Clare Lombardelli has warned that interest rates may need to rise if energy prices stay elevated, unless there is clear evidence of a weaker economy.

Lombardelli made this statement at the Sixth Biennial Conference on Macroeconomic Policy in Warsaw. She noted that prolonged high energy prices pose a significant risk to inflation expectations and wage bargaining.

The Deputy Governor stressed that monetary policy should not react mechanically to energy prices but remain alert to their indirect transmission. Lombardelli emphasized that the key issue is the interaction of the underlying economy, higher energy prices, and their transmission to inflation expectations and wage growth.