Energy price pressure has subsided
However, the lack of workers still poses a big risk to inflation
BOE grabs £3.8 billion from emergency intervention
The Governor of the Bank of England (BOE), Andrew Bailey said inflation could drop significantly this year following the recent decline in global energy prices.
The statement was made when Bailey testified before the Treasury committee on the Financial Stability Report on Monday.
He said that the surge in inflation last year was driven by the war in Ukraine which drove energy prices to skyrocket.
However, the UK could see a rapid fall in inflation as energy prices are no longer rising, but instead showing a decline.
However, he warned that the lack of workers could still pose the greatest risk to inflation remaining high for longer than expected.
When asked about the stability of the UK's financial system, Bailey said the risk to the nation's assets following Liz Truss's minute budget last September appeared to have almost disappeared.
Even so, confidence in the UK remains fragile where it will take some time to convince the public that the country is back to normal, Bailey added.
The head of the central bank also confirmed that the BOE made a profit of around £3.8 billion from selling government bonds bought in emergency financial market interventions when Liz Truss's mini-budget crisis erupted.
His comments come as the BOE is expected to raise interest rates for the 10th time in a row early next month.
Investors will first focus on the release of employment data on Tuesday, and UK inflation on Wednesday.
