In a interview with BBC, BoE Governor Andrew Bailey emphasized that the central bank expects inflation to decline sharply this year as the impact of last year’s steep energy price increases drops from year-on-year price comparisons. He expressed relief that inflation had stabilized and noted some “encouraging signs” of progress. However, he urged continued vigilance, stating, “we have to be extremely vigilant on that front.”
Bailey also issued a warning to businesses setting prices, cautioning that “if we get inflation embedded, interest rates will have to go up further.” While acknowledging that companies must set prices according to the costs they face, he urged them to remember the anticipated decrease in inflation this year when setting prices: “we do expect inflation to come down sharply this year and I would just say please bear that in mind.”
