Middle East energy shock puts upward pressure on inflation, UK chancellor says

By Gokhan Ergocun

ISTANBUL (AA) - Higher energy prices driven by the conflict in the Middle East are putting upward pressure on UK inflation, British Chancellor of the Exchequer John Healey warned on Wednesday.

In a letter setting out the annual remit for the Bank of England's Monetary Policy Committee, Healey told Governor Andrew Bailey that monetary policy remains vital to supporting households and businesses by returning inflation sustainably to its 2% target in the medium term.

"Higher energy prices resulting from the conflict in the Middle East are putting upwards pressure on inflation," Healey wrote.

He noted that while the Monetary Policy Committee holds primary responsibility for returning inflation to target, the government's fiscal plans support the central bank by reducing borrowing over time and easing inflationary pressures.

Healey stated that low and stable inflation is essential for long-term economic growth and rising living standards, reducing uncertainty and easing costs for consumers and businesses.

He also confirmed that the central bank's Asset Purchase Facility will remain in place for the 2027-28 financial year and for as long as needed, in line with the multiyear strategy set out by policymakers on Sept. 17.

Reiterating the government's full support for the committee's operational independence, Healey said the symmetric 2% target, measured by the 12-month increase in the Consumer Prices Index, applies at all times.

Gökhan Ergöçün