Bank of England governor warns of soaring prices becoming 'embedded'
The Bank's governor, Andrew Bailey, told BBC Radio 4's Today programme: "The real risk we're responding to is that inflation becomes embedded and it doesn't come down in the way that we would otherwise expect."
He also warned against high pay rises, saying this would make inflation worse and "it's the people who are least well off who are worse affected because they don't have the bargaining power". UK inflation - the rate at which prices rise - is currently at 9.4%, which is the highest level for more than 40 years.
Andrew Sentance, who was a member of the Bank's rates-setting committee during the 2008 financial crisis, told BBC Breakfast: "We're going to see a couple of years… when household incomes in real terms are squeezed much more severely than we've seen in other times since the Second World War." He told the BBC that the Tory leadership candidates, Liz Truss and Rishi Sunak, should be focused on tackling inflation rather than tax cuts."What [the leadership candidates are] talking about is that the Office for Budget Responsibility [in March] said we'd be borrowing about £30bn less than we absolutely could to meet the fiscal target of a balanced current budget in a few years' time," he said.
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