Bank of England Governor Andrew Bailey said inflation is at 30-year high and has risk of getting out of control if restraint is not put on pay raises.
“I’m not saying nobody gets a pay rise, don’t get me wrong, but I think, what I am saying, is we do need to see restraint in pay bargaining otherwise it will get out of control,” Bailey told BBC radio in an interview broadcast on Friday.
“We are looking, I think, to see quite clear restraint in the bargaining process because otherwise, as I say, it will get out of control. It’s not at the moment but it will do.”
Earlier the BoE raised interest rate to 0.5% with half of its policy makers favoring 0.75%.
The BoE said consumer price inflation – which was 5.4% in December – was set to hit around 7.25% in April before dropping, and post-tax income for working households would fall by 2% this year, the biggest calendar year squeeze since at least 1990.
