BoE governor Bailey signals further rate hikes in face of inflation uncertainty

Wage-price spiral

Elliot Gulliver-Needham
clock • 2 min read

Andrew Bailey, governor of the Bank of England, has warned that the central bank will likely continue to raise interest rates as inflation remains sticky.

In a speech today (17 May), Bailey warned that the bank was now set on preventing ‘second-round' effects on domestic wage and price setting, also known as a wage-price spiral. He added that "risks to inflation are skewed significantly to the upside", primarily due to risks of an intensifying wage-price spiral, which he added may take longer to unwind than it did to emerge. The length of a potential wage-price spiral had not been estimated in the bank's models, he said, as "the current circumstances are so unusual, it is hard to be precise about the extent of this asymmetry". UK Q...

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