BoE Boss Says Very Uneasy About UK Inflation

Bank of England governor Andrew Bailey has hinted that the main hurdle to increasing interest rates has been cleared with the end of the government's furlough scheme, but he admitted that he was "very uneasy" regarding the inflation situation, media outlets said Tuesday.

Giving evidence to the UK’s Commons Treasury select committee on Monday, Bailey admitted that the rising cost of living was a cause for significant concern and that he had come close to voting for an increase in borrowing costs when the Bank's monetary policy committee last met in early November.

As the end of the UK's furlough scheme had generated little increase in unemployment so far, Bailey suggested that this was the first hurdle cleared with regard to rising rates, but more evidence was needed.

The labor market looks "tight", he said, adding that this is "the big issue at the moment". BoE currently expects UK inflation to hit 5% next spring, well above the 2% target set by the government.