Andrew Bailey yesterday warned of instability ‘for the foreseeable future’ after renewed Middle East hostilities sent oil prices soaring and stoked interest rate hike fears.
The Bank of England governor told MPs on the Treasury select committee that the situation had deteriorated in the past week as a ‘fragile’ ceasefire was shattered.
The resumption of fighting has scotched hopes that a peace deal between the US and Iran would mark a return to normal after months of war.
And it has sent oil prices soaring again, with Brent crude yesterday climbing above $87 a barrel – having been close to $70 at the start of the month. Economists fear they could even soar above $160.
Higher energy prices have revived inflation fears, prompting a sell-off in UK bonds, known as gilts.
