The Bank of England (BOE) will act if it finds higher inflation expectations are driving up wage increases, said Governor Andrew Bailey who restated his statement at a policy meeting last week.
Speaking during a virtual question -and -answer session with the public on Monday, Bailey said there is a risk of more congestion in the economy, especially in demand for labor that could stimulate higher inflation expectations.
Answering a question about making inflation easier to understand, Bailey told that the BOE currently lacks the tools to control rising gas prices but they are still monitoring the rise in inflation in the economy.
“What the central bank is concerned about is that when the people experience an increase in inflation like this, we want to stop it from becoming common in the economy,” Bailey said.
"And that's why the BOE needs to act on interest rates if we see the evidence become clear," he added.
In addition, he also added that any decision to change the interest rate cannot be done simply because it requires careful consideration.
Last week, the BOE has disappointed the market by keeping interest rates at 0.10%, in contrast to expectations to see a rate hike.
