Bank of England boss Bailey hints at rate hike to calm inflation

Bank of England boss Andrew Bailey hints at an interest rate hike to calm inflation

Andrew Bailey has reignited speculation of an interest rate hike by saying the Bank of England ‘will have to act’ to keep a lid on inflation.

Speaking to the G30 group of international economists and central bankers on Sunday, the central bank’s governor said that monetary policy ‘will have to act and must do so if we see a risk, particularly to medium-term inflation and to medium-term inflation expectations’.

And traders are even betting that rates could rise as early as next month. 

Rate hike: Bank of England governor Andrew Bailey (pictured) said the central bank ‘will have to act’ to keep a lid on inflation

Yesterday economists at JP Morgan and Goldman Sachs both said they think a November rate rise is likely. 

But Danny Blanchflower, an economist and former member of the Bank’s rate-setting Monetary Policy Committee (MPC), said officials would be ‘foolish’ to raise rates so soon – and could even risk plunging the economy back into a recession.

The Bank slashed rates to a record low of 0.1 per cent last year to encourage spending during the Covid slump.

Traders are fully pricing in that rates will rise to 0.25 per cent at the MPC’s next meeting on November 3.