Bank of England Governor Bailey Warns Prolonged Energy Shock Will Make Inflation Harder to Tame

Bank of England Governor Mark Carney said the impact of energy cost shocks on UK inflation remains limited for now, but avoiding broader inflationary effects is becoming increasingly difficult over time. 'We need to focus on how this inflation shock transmits into indirect and second-round effects,' Bailey told CNN in an interview aired Tuesday. 'At present, this transmission has been relatively mild in the UK, which is clearly encouraging. But the longer it lasts, the harder it becomes to manage.' When asked if interest rates in the UK would rise soon, he said, 'The analytical framework we have always relied on has not changed.' Last month, Bailey warned that the longer oil and gas costs remain high, the more difficult it will be to resist pressure for rate hikes. (Sina Finance)