London Daily

Focus on the big picture.
Sunday, Feb 22, 2026

Bigger interest rate hikes on the table, says Bank boss

Bigger interest rate hikes on the table, says Bank boss

The Bank of England could raise rates by as much as 0.5% at its next rates meeting, its boss said as he pledged to get inflation under control.

However, Andrew Bailey said such a move is "not locked in" in a speech to City leaders on Tuesday.

Data on Wednesday is expected to show June's inflation picked up from May's 40-year-high of 9.1%.

The Bank is tasked with trying to wrestle that figure back down to 2%.

Mr Bailey, the Bank Governor, said in a speech at Mansion House that a 50 basis point rise - from 1.25% to 1.75% - will be one of the options for the Monetary Policy Committee when it next decides on rates on 4 August.

"At the MPC's last meeting we adopted language which made clear that if we see signs of greater persistence of inflation, and price and wage setting would be such signs, we will have to act forcefully," he said.

"In simple terms this means that a 50 basis point increase will be among the choices on the table when we next meet.

"50 basis points, and anyone who predicts that is doing so based on their own view."

For at least the past seven years the Bank has dropped and raised rates in 0.25 percentage point increments.

But the inflation figures for June, which the Office for National Statistics will put out on Wednesday, are widely expected to have risen again from May's 9.1%, well wide of the Bank's 2% target.

The Bank has forecast that the pace of price rises will top 11% in October.

"Let me be quite clear, there are no ifs or buts in our commitment to the 2% inflation target. That's our job, and that's what we will do," the Governor said.

But it is a daunting task at this time.

"From the perspective of monetary policy, these times are the largest challenge to the monetary policy regime of inflation targeting that we have seen in the quarter century since the MPC was created in 1997," Mr Bailey added.

Factors pushing up inflation include the reopening of the economy as it recovers from the Covid pandemic, a shortage of UK workers and Russia's war against Ukraine.

"The big external shocks - from Russia and supply chains - account both for a large part of the inflation overshoot above target and for the squeeze on real incomes," he said.

"My sense of the latest data is that the supply chain goods shock has started to ease, but the Russian impact - particularly on natural gas prices in Europe, is going the other way as we look ahead to the winter.

"The effect of these shocks has been to increase the cost of things we import relative to things we produce domestically," he said.

Meanwhile, in his first speech as Chancellor, Nadhim Zahawi said inflation will be brought back under control by the government.

The government will deliver "sound public finances" to help achieve that, Mr Zahawi said.

Newsletter

Related Articles

0:00
0:00
Close
UK Government Weighs Removing Prince Andrew from Line of Succession After Arrest
Prince Andrew’s Arrest in UK Rekindles Scrutiny Over US Handling of Epstein Records
Trump’s Strategic Warning to UK Over Chagos Islands Deal Sparks Diplomatic Whiplash
Starmer Government Postpones Local Elections Affecting 4.5 Million Voters
UK Economy Remains Fragile Despite Recent Upturn in Headline Indicators
UK Businesses Face Fresh Uncertainty Following US Tariff Ruling
Reform UK’s Senior Figures Face Scrutiny Over Remarks on Women and Family Policy
UK Electric Vehicle Drive Threatened by Shortage of 44,000 Qualified Technicians
University of Kentucky Trustees Advance Academic Reforms and Approve Coliseum Plaza Purchase
Boris Johnson Calls for Immediate Deployment of UK Troops to Support Ukraine
OpenAI CEO Sam Altman praises the rapid progress of Chinese tech companies.
North Korea's capital experiences a significant construction boom with the development of a new city district dubbed 'Pyonghattan'.
New electric vehicle charging service eliminates waiting times
Vox Populi confronts Justin Trudeau at Davos over vaccination policies
Poland's President Karol Nawrocki ENDS support for Ukrainian citizens:
The mayor of Rotherham in Britain
One day after ex-Prince Andrew's arrest, British police are searching his former home, while U.K. lawmakers will consider introducing legislation to remove him from the line of royal succession
Vandana Shiva reminding the world that Bill Gates did not invent anything.
Italy's PM Giorgia Meloni highlights record employment and economic growth
UK Confirms Preferential U.S. Trading Terms Will Continue After Supreme Court Tariff Ruling
U.S. and U.K. to Hold Talks on Diego Garcia as Iran Objects to Potential Military Use
UK Officials Weigh Possible Changes to Prince Andrew’s Position in Line of Succession Amid Ongoing Scrutiny
British Police Probe Epstein’s UK Airport Links and Expand High-Profile Inquiries
The Impact of U.S. Sanctions on Cuba's Humanitarian Crisis: A Tightening Noose
Trump Directs Government to Release UFO and Alien Information
Trump Signs Global 10% Tariffs on Imports
United Kingdom Denies U.S. Access to Military Base for Potential Iran Strike
British Co-founder of ASOS falls to his death from Pattaya apartment
Early 2026 Data Suggests Tentative Recovery for UK Businesses and Households
UK Introduces Digital-First Passport Rules for Dual Citizens in Border Control Overhaul
Unable to Access Live Financial Data for January UK Surplus Report
UK Government Considers Law to Remove Prince Andrew from Royal Line of Succession
UK ‘Working Closely with US’ to Assess Impact of Supreme Court Tariff Ruling
Trump Criticises UK Decision to Restrict Use of Bases in Potential Iran Strike Scenario
UK Foreign Secretary and U.S. State Chief Hold Strategic Talks as Tensions Rise Over Joint Air Base
Two teens arrested in France for alleged terror plot.
Nordic Fracture: How Criminal Scandals and Toxic Ties are Dismantling the Norwegian Crown
US Supreme Court Voids Trump’s Emergency Tariff Plan, Reshaping Trade Power and Fiscal Risk
King Charles III Opens London Fashion Week as Royal Family Faces Fresh Scrutiny
Trump’s Evolving Stance on UK Chagos Islands Deal Draws Renewed Scrutiny
House Democrat Says Former UK Ambassador Unable to Testify in Congressional Epstein Inquiry
No Record of Prince Andrew Arrest in UK as Claims Circulate Online
UK Has Not Granted US Approval to Launch Iran Strikes from RAF Bases, Government Confirms
AI Pricing Pressure Mounts as Chinese Models Undercut US Rivals and Margin Risks Grow
Global Counsel, Advisory Firm Co-Founded by Lord Mandelson, Enters Administration After Client Exodus
London High Court dispute over Ricardo Salinas’s $400mn Elektra share-backed bitcoin loan
UK Intensifies Efforts to Secure Saudi Investment in Next-Generation Fighter Jet Programme
Former Student Files Civil Claim Against UK Authorities After Rape Charges Against Peers Are Dropped
Archer Aviation Chooses Bristol for New UK Engineering Hub to Drive Electric Air Taxi Expansion
UK Sees Surge in Medical Device Testing as Government Pushes Global Competitiveness
×