Energy Price Pressures May Prompt UK Interest Rate Hikes

The Bank of England's Deputy Governor Clare Lombardelli has warned that persistently high energy prices may lead to second-round inflation effects in the UK economy.

Lombardelli stated that if energy price pressures remain elevated and leak into broader inflation expectations, the Bank may need to raise interest rates unless clear disinflation or economic weakness emerges.

The comments suggest a risk that the Bank of England may need to tighten monetary policy if energy-driven price pressures become more entrenched across the wider economy.