BoE Gov. Bailey: Inflation looks set to fall markedly this year

Reuters reports that the Bank of England Governor Andrew Bailey said on Monday that inflation looks set to fall markedly this year as energy prices decrease.

However, he said that a shortage of workers in the labour market poses a "major risk" to this scenario.

"I think that going forwards the major risk to inflation coming down ... is the supply side - and in this country particularly, the question of the shrinkage of the labour force," Bailey told lawmakers on parliament's Treasury Committee.

Key quotes

We are likely to see inflation fall in the year ahead as energy prices are coming down.
    
Major risk to boe's central case for inflation coming down is uk labour shortage.
    
Likely there will be negative short-term impact from covid in china, don't expect it to be lasting.

GBP/USD update

Andrew Bailey's comments are similar to those he made late last year and are having little impact on GBP/USD in the North American session. GBP/USD is down some 0.2% at 1.2202. The range on the day so far has been 1.2170 and 1.2288.

Reuters said that ''the BoE is expected to raise interest rates for a tenth time in a row early next month and the main question for investors is the scale of the increase as the central bank weighs up the risk of a recession with the need to fight inflation.''