London Daily

Focus on the big picture.
Wednesday, Jan 14, 2026

Bank of England chief warns of fresh interest rate hike

Bank of England chief warns of fresh interest rate hike

The governor of the Bank of England has warned interest rates may need to rise by more than previously expected.

Speaking in Washington, Andrew Bailey said "inflationary pressures" meant a "stronger response" could be needed from the Bank than thought in August.

The next rate rise decision is on 3 November, days after the government lays out its economic plans.

Meanwhile, Mr Bailey described his discussions with the new Chancellor Jeremy Hunt as a "meeting of minds".

Mr Hunt, who was appointed on Friday after his predecessor Kwasi Kwarteng was abruptly sacked, has confirmed the government will set out its tax and spending plans on 31 October.

He has already signalled that some taxes could rise and public spending may fall.

Mr Bailey said the Bank will not take any action on interest rates until after this fiscal plan is announced, describing this as "the correct sequence" of action.

But speaking on Saturday, he said officials would "not hesitate to raise interest rates to meet the inflation target" of 2%.

The warning comes just weeks after the Bank hiked interest rates by 0.5% to 2.25% on 22 September.

Prior to Mr Bailey's comments, the markets were expecting a rise of between 0.75% and 1% when the Bank's Monetary Policy Committee makes its next rates decision in November.

Mr Bailey also commented on the effects of the government's recent mini-budget, which he said had been followed by some "some violent moves in the last few weeks" in UK markets.

He also spoke of the need "to have the Office for Budget Responsibility (OBR) involved" in the government's budget discussions, adding that "flying blind is not a way to achieve sustainability".

Last month, it was revealed that Mr Kwarteng had refused to allow the OBR to review the impact of his mini-budget on the economy before he delivered the statement.

The governor's intervention comes just hours after Mr Hunt told the BBC that some taxes could rise in the coming months and some departments could see their budgets slashed.

Marking a significant change in government policy, the chancellor told the Today programme that difficult decisions will be needed "across the board".

Taking questions after his speech in Washington, Mr Bailey signalled that he was in lockstep with the new chancellor.

"I can tell you that I spoke to Jeremy Hunt, the new chancellor, yesterday", Mr Bailey said.

"I can tell you that there was a very clear and immediate meeting of minds between us about the importance of fiscal sustainability and the importance of taking measures to do that."

He added that the comment was intended as a "clear message for markets".


Watch: The Bank of England "will not hesitate to raise rates", says governor Andrew Bailey


Newsletter

Related Articles

0:00
0:00
Close
UK Intensifies Arctic Security Engagement as Trump’s Greenland Rhetoric Fuels Allied Concern
Meghan Markle Could Return to the UK for the First Time in Nearly Four Years If Security Is Secured
Meghan Markle Likely to Return to UK Only if Harry Secures Official Security Cover
UAE Restricts Funding for Emiratis to Study in UK Amid Fears Over Muslim Brotherhood Influence
EU Seeks ‘Farage Clause’ in Brexit Reset Talks to Safeguard Long-Term Agreement Stability
Starmer’s Push to Rally Support for Action Against Elon Musk’s X Faces Setback as Canada Shuns Ban
UK Free School Meals Expansion Faces Political and Budgetary Delays
EU Seeks ‘Farage Clause’ in Brexit Reset Talks With Britain
Germany Hit by Major Airport Strikes Disrupting European Travel
Prince Harry Seeks King Charles’ Support to Open Invictus Games on UK Return
Washington Holds Back as Britain and France Signal Willingness to Deploy Troops in Postwar Ukraine
Elon Musk Accuses UK Government of Suppressing Free Speech as X Faces Potential Ban Over AI-Generated Content
Russia Deploys Hypersonic Missile in Strike on Ukraine
OpenAI and SoftBank Commit One Billion Dollars to Energy and Data Centre Supplier
UK Prime Minister Starmer Reaffirms Support for Danish Sovereignty Over Greenland Amid U.S. Pressure
UK Support Bolsters U.S. Seizure of Russian-Flagged Tanker Marinera in Atlantic Strike on Sanctions Evasion
The Claim That Maduro’s Capture and Trial Violate International Law Is Either Legally Illiterate—or Deliberately Deceptive
UK Data Watchdog Probes Elon Musk’s X Over AI-Generated Grok Images Amid Surge in Non-Consensual Outputs
Prince Harry to Return to UK for Court Hearing Without Plans to Meet King Charles III
UK Confirms Support for US Seizure of Russian-Flagged Oil Tanker in North Atlantic
Béla Tarr, Visionary Hungarian Filmmaker, Dies at Seventy After Long Illness
UK and France Pledge Military Hubs Across Ukraine in Post-Ceasefire Security Plan
Prince Harry Poised to Regain UK Security Cover, Clearing Way for Family Visits
UK Junk Food Advertising Ban Faces Major Loophole Allowing Brand-Only Promotions
Maduro’s Arrest Without The Hague Tests International Law—and Trump’s Willingness to Break It
German Intelligence Secretly Intercepted Obama’s Air Force One Communications
The U.S. State Department’s account in Persian: “President Trump is a man of action. If you didn’t know it until now, now you do—do not play games with President Trump.”
Fake Mainstream Media Double Standard: Elon Musk Versus Mamdani
HSBC Leads 2026 Mortgage Rate Cuts as UK Lending Costs Ease
US Joint Chiefs Chairman Outlines How Operation Absolute Resolve Was Carried Out in Venezuela
Starmer Welcomes End of Maduro Era While Stressing International Law and UK Non-Involvement
Korean Beauty Turns Viral Skincare Into a Global Export Engine
UK Confirms Non-Involvement in U.S. Military Action Against Venezuela
UK Terror Watchdog Calls for Australian-Style Social Media Ban to Protect Teenagers
Iranian Protests Intensify as Another Revolutionary Guard Member Is Killed and Khamenei Blames the West
Delta Force Identified as Unit Behind U.S. Operation That Captured Venezuela’s President
Europe’s Luxury Sanctions Punish Russian Consumers While a Sanctions-Circumvention Industry Thrives
Berkshire’s Buffett-to-Abel Transition Tests Whether a One-Man Trust Model Can Survive as a System
Fraud in European Central Bank: Lagarde’s Hidden Pay Premium Exposes a Transparency Crisis at the European Central Bank
Trump Announces U.S. Large-Scale Strike on Venezuela, Declares President Maduro and Wife Captured
Tesla Loses EV Crown to China’s BYD After Annual Deliveries Decline in 2025
UK Manufacturing Growth Reaches 15-Month Peak as Output and Orders Improve in December
Beijing Threatened to Scrap UK–China Trade Talks After British Minister’s Taiwan Visit
Newly Released Files Reveal Tony Blair Pressured Officials Over Iraq Death Case Involving UK Soldiers
Top Stocks and Themes to Watch in 2026 as Markets Enter New Year with Fresh Momentum
No UK Curfew Ordered as Deepfake TikTok Falsely Attributes Decree to Prime Minister Starmer
Europe’s Largest Defence Groups Set to Return Nearly Five Billion Dollars to Shareholders in Twenty Twenty-Five
Abu Dhabi ‘Capital of Capital’: How Abu Dhabi Rose as a Sovereign Wealth Power
Diamonds Are Powering a New Quantum Revolution
Trump Threatens Strikes Against Iran if Nuclear Programme Is Restarted
×