9 January 2023 | Other

Bank of England: price caps for energy products may provoke the growth of inflation

According to representative of the British central bank Catherine Mann, the implementation of price cap for energy products as a counter-move to a price spike may provoke the growth of inflation in other fields. It will happen due to the growth of consumer expenditures. 

On Saturday, during a panel discussion at the annual conference of the American Economics Association, which took place in New Orleans, Mann made a statement. She said that the price cap for energy products allowed to mechanically decrease the inflation rates that are important for monetary policy.

As Mann said, the price cap allowed the citizens to direct their expenditures to other elements of the consumption bundle. Then, the inflation in these segments will grow. 

Also, Catherine Mann said that after the current ceiling is removed, the uncertainty related to the cost of raw materials will be high. 



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