Workers should “think and think” before asking for pay increases, Andrew Bailey, head of the Bank of England’s Bank of England, told MPs on Monday.
The governor said high earners in particular should consider the impact of inflation before seeking salary increases as prices rise.
It comes as the Office for National Statistics is expected to confirm later this week that inflation has passed 8%, while the Bank of England itself has warned it is likely to peak at 10.25 by the end of the year. percent will reach.
Bailey told MPs on the Treasury’s selection committee: “I’ve talked about this in an interview. I really think people, especially those with higher incomes, need to think and think about asking for high pay raises.
“It is a social question. But I’m not preaching about that. I was asked if I got a raise myself this year and I said no, I asked the bank not to give me one, because I felt it was the right choice for me personally.
“But everyone has to make their own judgment about that. It’s not up to me to tell people what to do.
“In that sense, I know I may have been interpreted that way, but I wasn’t. What I said is that maybe people should think about it, especially people in that situation.”
But unions hit back at Mr Bailey, telling him not to teach workers about wage moderation.
Sharon Graham, Unite general secretary, said: “Once again workers are being asked to pay the price, this time for inflation and the energy crisis. Inflation is not caused by workers. Why should they pay for the failure of the energy market and the total mess of government policy?
“Workers don’t need lessons from the Governor of the Bank of England on wage moderation. Why is it that every time there is a crisis, rich men ask ordinary people to pay for it?
“Enough is enough, we are going to demand that employers who can pay, also pay. Let’s be clear, wage moderation is nothing more than a call for a national wage cut.”
While defending the central bank’s monetary policy, Mr Bailey warned of an “apocalyptic” risk of rising global food prices due to the war in Ukraine.
Bailey told MPs he felt “helpless” despite households being plagued by rising inflation.
“The main cause of inflation and what is driving it down is the very large real income shock caused by outside forces, especially energy prices and global commodity prices,” he said.
“That will have an impact on domestic demand and it will dampen activity, and I’m afraid it looks like it will increase unemployment.
He told the committee that “we are walking a very narrow path” between rising inflation and risks to growth.
Bailey said the war in Ukraine has led to an unpredictable rise in inflation, stressing that there is still “major concern” about further increases in food prices due to ongoing conflict.
He said: “The Ukrainian finance minister said there is food in the store, but they can’t get it out.
“While he was optimistic about planting crops, as a major supplier of wheat and cooking oil, he said we can’t ship it and it’s getting worse.
“It is a major concern for this country and a major concern for the developing world.
“Sorry to be apocalyptic, but that’s a big concern.”
Food inflation in the UK rose 5.9 percent in March and is expected to accelerate in the coming months.
The Governor also told the committee that he believes the Bank “could have done nothing else” to avoid sharp price increases.
“There has been a series of supply shocks, most recently with the impact of the war – the Russian invasion of Ukraine.
“We can’t predict things like wars — that’s not in anyone’s power.”