The governor of the Bank of England Andrew Bailey has warned on Wednesday that interest rates could rise further due to “persistent” inflation “pressures.”
Bailey was speaking to business leaders at the British Chambers of Commerce annual conference in London and he revealed that the tight labour market is “happening at a slower pace.”
Baily said, “I can assure you that the Monetary Policy Committee will adjust bank rate as necessary to return inflation to target sustainably in the medium term, in line with its remit.
“If there were to be evidence of more persistent pressures, then further tightening in monetary policy would be required.
“Our commitment to the 2% inflation target is unwavering.”
The governor said, “There are signs that the labour market is loosening a little.”
He then added, “The easing of labour market tightness is happening at a slower pace than we expected in February, and the labour market remains very tight.”
On 11 May the Bank raised interest rates by 0.25% to 4.5% and they now forecast there will be no recession this year.
The economic growth has been upgraded but the Bank warned inflation will be higher this year than they had previously thought.