Lombardelli: High Energy Prices May Warrant Tighter Policy

Bank of England Deputy Governor Clare Lombardelli warned that prolonged high energy prices could lead to broader economic effects, including inflation and reduced demand.

Lombardelli emphasized that wage growth continues to run too high to align with the Bank of England's inflation target. She noted that monetary policy remains restrictive as officials balance lower inflation against risks of reduced demand.

The deputy governor clarified that she was not suggesting the central bank should respond mechanically to energy price movements, but rather consider how higher energy prices interact with the underlying economy and spread through the system.