Bank of England Governor Andrew Bailey said on 25 September that keeping Bank Rate on hold gets harder the longer energy prices stay high. Investors priced about an 80 percent chance of a November increase, and a little over four quarter-point increases on the curve. A day earlier, two deputy governors had moved closer to an increase.
Bank of England governor Andrew Bailey said on 25 September that keeping Bank Rate on hold gets harder the longer energy prices stay high. The Independent reports that a deputy governor, only a day earlier, said a rate hike is looking increasingly likely if energy prices remain elevated. Bailey also spoke about the direct effects of the energy shock.[1], [2]
Investors priced a roughly 80 percent chance of a November increase, with a little over four quarter-point increases on the curve. The Bank's statement last week puts inflation slightly over 4 percent in early 2027, against a 2 percent target. Bank Rate was held at 3.75 percent at that meeting by a 6 to 3 vote.[1]
Bailey told a monetary economics conference at the University of Oxford that the evidence on energy prices feeding into inflation expectations is quite subdued, and he still called the pass-through early. Deputy governors Sarah Breeden and Clare Lombardelli had, on 24 September, moved closer to an increase. The Bank of England has held Bank Rate since the Iran war began, while the Federal Reserve and the European Central Bank have raised theirs.[1], [2]
