London Daily

Focus on the big picture.
Sunday, Mar 29, 2026

Look past the headlines and Bank of England's governor seems ready to flex his eyebrows

Look past the headlines and Bank of England's governor seems ready to flex his eyebrows

The Bank of England has announced that it's leaving interest rates and its quantitative easing programme unchanged. In practical terms, the Bank has done nothing to counter inflation. But that could soon change, says Ed Conway.

Once upon a time, which is to say about a century ago, central bankers did not communicate in the way normal people do.

Rather than telling the world what they were about to do, they used their eyebrows instead.

If the governor raised his eyebrows (it has always been a he, so far), that was a clear sign to markets and investors that something important was coming - a change in interest rates or financial regulation or something similar.

Now we're in the era of 24-hour TV news and social media, you might have thought that the eyebrows would no longer be necessary, but there's reason to believe the current governor - Andrew Bailey - is getting ready to flex them.

BoE governor Andrew Bailey


Today the Bank of England announced that it was leaving interest rates where they are at 0.1%, and would leave its quantitative easing (QE) programme, whereby it is creating money to buy government bonds, unchanged.

There were two members of the nine-person monetary policy committee voting to trim QE, but in practical terms, the Bank did nothing. No surprises.

Yet read deeper into the reams of documents the Bank released today, and you get the sense of an eyebrow moving somewhat - quivering if not rising. The key fact in the backdrop to this is that inflation - as measured by the consumer price index - is now comfortably above the Bank's 2% target.

Indeed, it's so far above target that the governor had to write a letter of explanation to the chancellor.

In that letter the governor trotted out the Bank's familiar position: yes inflation is high, yes this is higher than we expected, but even so, we expect it to fall back in due course. This will, so he wrote, be "transitory".

But while such pronouncements seemed confident earlier this year, they are becoming slightly less convincing as prices rise higher and higher. For one thing, the Bank now thinks that not only will CPI inflation rise above 4%, but it will also be there until the middle of next year. That's nearly a whole year of inflation at double the Bank's target.

For another, the Bank conceded that energy prices could well push that up even further. Finally, within the minutes, the Bank signalled that interest rates may soon go up. Developments, it said, "appear to have strengthened that case".

In the wake of these minutes, the traders betting on future changes in interest rates seemed to take this as a signal.

A small increase (0.15 percentage points) is now nearly a 90% probability next February, according to these markets. The eyebrows, in other words, seem to be signalling something.

Comments

Oh ya 5 year ago
Central banks can not raise interest rates to slow inflation. Countries are so far in debt they are borrowing money now to make ends meet. They would be bankrupt in a month if the rate goes up.

Newsletter

Related Articles

0:00
0:00
Close
Thousands Rally in London to Oppose Rise of Far-Right Movements
Hong Kong Official Rejects Allegations of Surveillance Orders Targeting UK-Based Dissidents
PayPal Expands Cryptocurrency Services to Allow UK Users to Buy and Sell Bitcoin
UK Minister Challenges Reform Party’s ‘Pro-Family’ Agenda as Debate Intensifies
Concerns Grow Over Meningitis Risk Among UK Students Amid Warning Signs of New Outbreaks
Japanese Grand Prix 2026: Schedule, UK Start Times and Full Broadcast Details
Electric Vehicles Seen as Strategic Solution to UK Fuel Reserve Concerns
Rise of Lone-Actor Threats and Online Radicalisation Drives New Wave of Antisemitic Attacks in the UK
Canada Advances Plan to Ban Cryptocurrency Donations in Election Campaigns
UK Faces Looming Medicine Shortages as Iran Conflict Threatens Supply Chains
Deadly Meningitis Outbreak in the U.K. Highlights Urgent Need for Vaccination
Fresh Claims Emerge Over Harry and Meghan’s Australia Visit as Insider Speaks Out
NATO Assessment Indicates UK Defence Spending Has Fallen Below Alliance Average
FTSE 100 Slips as Middle East Tensions Weigh on Investor Sentiment
UK Economy Begins to Feel Early Impact of Iran Conflict as Policy Challenges Intensify
Russian National Jailed in UK After Assault Case Linked to Barron Trump’s Alert
Energy Price Surge Accelerates Shift Away from Fossil Fuels in UK Homes
UK Museums House More Than 260,000 Human Remains, New Report Reveals
Surging UK Gilt Yields Reflect Inflation Pressures and Fiscal Uncertainty
UK Issues Updated Guidance on Children’s Screen Time with Focus on Balance and Wellbeing
UK Migration Figures Show Shifting Trends Across Asylum, Visas and Channel Crossings
UK Watchdog Launches Probe into Five Firms Over Alleged Fake Reviews and Ratings
Jaguar Land Rover Halts Production at UK Plant Amid Supplier Disruption
UK Police Reverse Position, Confirm Arrests Will Resume for Palestine Action Protests
UK Small Businesses Face Europe’s Steepest Cost Pressures, New Survey Reveals
US Envoy Urges UK to Proceed with King’s Visit Amid Diplomatic Sensitivities
FTSE 100 Drops Over One Percent as Middle East Tensions Weigh on Markets
UK CO2 Plant Set to Reopen as Authorities Move to Safeguard Supplies Amid Middle East Tensions
Trump Urges Stronger Defence Investment as He Questions Allied Naval Capabilities
New COVID Variant Detected in UK Raises Concerns Over Vaccine Effectiveness
FTSE Russell Moves to Standardise Free-Float Rules for UK and International Listings
HBO Max Launches in UK and Ireland, Marking Major Step in Global Streaming Expansion
UK Signals Readiness to Seize Russian ‘Shadow Fleet’ Vessels in Escalation of Sanctions Enforcement
Escalating Middle East Conflict Seen as Major Threat to UK Economic Stability
Early Challenges Mark Prince Harry and Meghan’s Australia Visit
UK Government Rejects Cover-Up Claims After Theft of Former PM Aide’s Phone
Cyprus Opens Strategic Talks with UK Over Sovereign Base Areas
UK Faces Risk of Sharp Inflation Surge Despite Stable Pre-Crisis Figures
UK Police Arrest Two Over Suspected Antisemitic Arson as Iran Link Investigated
UK Inflation Holds at Three Percent Ahead of Oil Price Shock from Iran Conflict
UK Fuel Prices Face Upward Pressure as Global Oil Trends Raise Cost Outlook
Girlguiding UK Sets September Deadline for Membership Policy Change Affecting Trans Participants
Germany and UK Accelerate Wind Power Expansion to Strengthen Energy Security
UK Moves to Ban Cryptocurrency Donations to Political Parties Over Foreign Influence Concerns
UK and Turkey Finalise Major Air Defence Agreement Worth Billions
Apple Introduces Mandatory Age Verification for iPhone Users in the UK
Diverging Views Emerge Over Meghan Markle’s Planned Australia Appearance
Trump Signals Frustration with UK Leadership Amid Diverging Approaches to Iran Conflict
UK Government Takes Control of Hunterston B as Landmark Nuclear Decommissioning Begins
UK Public Inflation Expectations Jump Sharply in March, Raising Pressure on Bank of England
×