Bank of England governor Andrew Bailey warned that UK central bankers would have to move to curb rising inflation, suggesting that base rate could soon increase.

Speaking at an online discussion yesterday, organised by the Group of Thirty international monetary affairs consultancy, Bailey said: “Monetary policy cannot solve supply-side problems – but it will have to act and must do so if we see a risk, particularly to medium-term inflation and to medium-term inflation expectations.”

While Bailey predicted that the recent jump in inflation would be temporary, he warned that climbing energy costs would continue to put upwards pressure on prices, according to Reuters. 

The Bank has forecast that inflation will rise to more than double its target at over 4%.

He said: “That’s why we at the Bank of England have signalled, and this is another such signal, that we will have to act. But of course that action comes in our monetary policy meetings.”

Former ratesetter David Blanchflower, who sat on the monetary policy committee between 2006 and 2009, warned that a sudden increase in base rate would be a “terrible error” that could even push the UK into recession.

Speaking on the BBC Radio 4 Today programme, Blanchflower said such a reaction would be an  “absolute disaster” advising MPC members to instead take a “steady as you go” approach.

He said: “We have had a couple of months of growth of inflation, but it looks terribly temporary.”

Blanchflower argued that increases in energy prices were “one-off shocks”.