Key events
Introduction: Bank of England chief warns of further rate hikes if firms raise prices
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
Andrew Bailey, the governor of the Bank of England, has appealed to businesses to avoid price rises but expressed confidence that the rises in the cost of living would slow sharply in the early summer.
Speaking on BBC radio 4’s Today programme, he admitted that inflation had not yet eased, after it unexpectedly rose to 10.4% in February.
Companies should set prices in a way that do not embed inflation at current levels because it could hurt people and would mean higher interest rates, he said.
If all prices try to beat inflation then we will get domestic inflation that will start repeating itself. Higher inflation really benefits nobody and particularly hurts the least well-off in society.
Rising inflation hits the least well-off hardest because they spend a bigger proportion of their income on food and energy.
Bailey said he hasn’t seen evidence of profiteering by companies, but other policymakers are worried that after the pandemic and Brexit, businesses face less European competition, which makes the UK more inflation-prone.
Last year, Bailey called on workers not to ask for big pay rises, sparking a backlash from unions. As wage growth has been under control, he’s now asking firms to stop raising prices further.
His comments came as government figures released on Thursday showed that the average council tax in the UK will exceed £2,000 for the first time next month.
As local authorities struggle under growing financial pressures, it emerged that the average bill for band D properties will go up by £99 to £2,065 for 2023-24.
In towns and cities areas outside London bills rise by 5.1% to an average of £2,059, while rural parts of the country will see an increase of 5% to just below £2,140.
The Agenda
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8.15am GMT: France S&P Global PMIs flash for March
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8.30am GMT: Germany S&P Global PMIs flash for March
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9am GMT: Eurozone S&P Global PMIs flash for March
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9.30am GMT: UK S&P/CIPS Global PMIs flash for March
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12.30pm GMT: US Durable goods orders for February
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1.45p GMT: US S&P Global PMIs flash for March
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4pm GMT: Bank of England policymaker Catherine Mann speaks
