(Adds quotes and context)
LONDON, Oct 17 (Reuters) - Bank of England Governor Andrew
Bailey sent a fresh signal on Sunday that the British central
bank is gearing up to raise interest rates for the first time
since the onset of the coronavirus crisis as inflation risks
mount.
Bailey said he continued to believe that the rise in
inflation would be temporary, but the recent surge in energy
prices would push it higher and make its climb last longer,
raising the risk of higher inflation expectations.
"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," Bailey said during an online panel discussion
organised by the Group of 30 consultative group.
"And that's why we at the Bank of England have signalled,
and this is another such signal, that we will have to act," he
said. "But of course that action comes in our monetary policy
meetings."
The BoE has said Britain's inflation rate is set to go over
4%, more than double its target, as the world economy reopens
from its COVID-19 lockdowns and the price of energy soars.
Investors are speculating that the BoE might become the
first of the world's biggest central banks to raise rates, later
this year or early in 2022.
Bailey said demand for workers in Britain had been stronger
than expected, while the number of younger and older workers
leaving the labour market had grown.
"I do have concerns about labour supply growth," he said.
(Reporting by William Schomberg; Editing by Kevin Liffey)