London Daily

Focus on the big picture.
Friday, Jun 20, 2025

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
16 Billion Login Credentials Leaked in Unprecedented Cybersecurity Breach
Senate hearing on who was 'really running' Biden White House kicks off
Iranian Military Officers Reportedly Seek Contact with Reza Pahlavi, Signal Intent to Defect
FBI and Senate Investigate Allegations of Chinese Plot to Influence the 2020 Election in Biden’s Favor Using Fake U.S. Driver’s Licenses
Vietnam Emerges as Luxury Yacht Destination for Ultra‑Rich
Plans to Sell Dutch Embassy in Bangkok Face Local Opposition
China's Iranian Oil Imports Face Disruption Amid Escalating Middle East Tensions
Trump's $5 Million 'Trump Card' Visa Program Draws Nearly 70,000 Applicants
DGCA Finds No Major Safety Concerns in Air India's Boeing 787 Fleet
Airlines Reroute Flights Amid Expanding Middle East Conflict Zones
Elon Musk's xAI Seeks $9.3 Billion in Funding Amid AI Expansion
Trump Demands Iran's Unconditional Surrender Amid Escalating Conflict
Israeli Airstrike Targets Iranian State TV in Central Tehran
President Trump is leaving the G7 summit early and has ordered the National Security Council to the Situation Room
Taiwan Imposes Export Ban on Chips to Huawei and SMIC
Israel has just announced plans to strike Tehran again, and in response, Trump has urged people to evacuate
Netanyahu Signals Potential Regime Change in Iran
Juncker Criticizes EU Inaction on Trump Tariffs
EU Proposes Ban on New Russian Gas Contracts
Analysts Warn Iran May Resort to Unconventional Warfare
Iranian Regime Faces Existential Threat Amid Conflict
Energy Infrastructure Becomes War Zone in Middle East
UK Home Secretary Apologizes Over Child Grooming Failures
Trump Organization Launches 5G Mobile Network and Golden Handset
Towcester Hosts 2025 English Greyhound Derby Amid Industry Scrutiny
Gary Oldman and David Beckham Knighted in King's Birthday Honours
Over 30,000 Lightning Strikes Recorded Across UK During Overnight Storms
Princess of Wales Returns to Public Duties at Trooping the Colour
Red Arrows Use Sustainable Fuel in Historic Trooping the Colour Flypast
Former Welsh First Minister Addresses Unionist Concerns Over Irish Language
Iran Signals Openness to Nuclear Negotiations Amid Ongoing Regional Tensions
France Bars Israeli Arms Companies from Paris Defense Expo
King Charles Leads Tribute to Air India Crash Victims at Trooping the Colour
Jack Pitchford Embarks on 200-Mile Walk to Support Stem Cell Charity
Surrey Hikers Take on Challenge of Climbing 11 Peaks in a Single Day
UK Deploys RAF Jets to Middle East Amid Israel-Iran Tensions
Two Skydivers Die in 'Tragic Accident' at Devon Airfield
Sainsbury's and Morrisons Accused of Displaying Prohibited Tobacco Ads
UK Launches National Inquiry into Grooming Gangs
Families Seek Closure After Air India Crash
Gold Emerges as Global Safe Haven Amid Uncertainty
Trump Reports $57 Million Earnings from Crypto Venture
Trump's Military Parade Sparks Concerns Over Authoritarianism
Nationwide 'No Kings' Protests Challenge Trump's Leadership
UK Deploys Jets to Middle East Amid Rising Tensions
Trump's Anti-War Stance Tested Amid Israel-Iran Conflict
Germany Holds First Veterans Celebration Since WWII
U.S. Health Secretary Dismisses CDC Vaccine Advisory Committee
Minnesota Lawmaker Melissa Hortman and Husband Killed in Targeted Attack; Senator John Hoffman and Wife Injured
Exiled Iranian Prince Reza Pahlavi Urges Overthrow of Khamenei Regime
×