Bank of England Warns Iran War Could Push UK Inflation Above 4%
Bank of England governor Andrew Bailey has warned inflationary pressures are still buffeting the UK economy and energy prices could rise further next year if the war in Iran continues. Speaking to MPs on Tuesday, the Bank chief said inflation risks were “to the upside” and energy prices “could be higher still” due to the conflict, which has triggered a surge in oil prices and stoked inflation…
Bank of England governor Andrew Bailey has cautioned that the ongoing war in Iran could push the UK's inflation rate above the 4% threshold. Speaking to MPs, Bailey expressed concerns about rising energy prices and market volatility due to the conflict. He noted that higher short-term bond yields, signaling a pessimistic outlook on UK economic risks, were consistent with fears of inflation.
The conflict has led to a blockade of the Strait of Hormuz and reduced oil supplies from major producers, causing Brent crude prices to approach $100 a barrel. Bailey reiterated that the Bank of England's Monetary Policy Committee would base its decision on economic data rather than a pre-planned rate hike. He also highlighted the impact of supply chain disruptions and warned that inflation could rise above 4%, double the Bank's target rate, if oil prices remain around $100 per barrel for an extended period.
The UK is facing higher borrowing costs on new debt, the highest in nearly 30 years, amid global inflation concerns.
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