London Daily

Focus on the big picture.
Thursday, Jan 22, 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 4 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
Trump’s Board of Peace: Breakthrough Diplomacy or a Hostile Takeover of Global Order?
Trump’s Board of Peace: Breakthrough Diplomacy or a Hostile Takeover of Global Order?
The Greenland Gambit: Economic Genius or Political Farce?
The Greenland Gambit: Economic Genius or Political Farce?
The Greenland Gambit: Economic Genius or Political Farce?
Will AI Finally Make Blue-Collar Workers Rich—or Is This Just Elite Tech Spin?
Prince William to Make Official Visit to Saudi Arabia in February
Prince Harry Breaks Down in London Court, Says UK Tabloids Have Made Meghan Markle’s Life ‘Absolute Misery’
Malin + Goetz UK Business Enters Administration, All Stores Close
EU and UK Reject Trump’s Greenland-Linked Tariff Threats and Pledge Unified Response
UK Deepfake Crackdown Puts Intense Pressure on Musk’s Grok AI After Surge in Non-Consensual Explicit Images
Prince Harry Becomes Emotional in London Court, Invokes Memory of Princess Diana in Testimony Against UK Tabloids
UK Inflation Rises Unexpectedly but Interest Rate Cuts Still Seen as Likely
AI vs Work: The Battle Over Who Controls the Future of Labor
Buying an Ally’s Territory: Strategic Genius or Geopolitical Breakdown?
AI Everywhere: Power, Money, War, and the Race to Control the Future
Trump vs the World Order: Disruption Genius or Global Arsonist?
Trump vs the World Order: Disruption Genius or Global Arsonist?
Trump vs the World Order: Disruption Genius or Global Arsonist?
Trump vs the World Order: Disruption Genius or Global Arsonist?
Arctic Power Grab: Security Chessboard or Climate Crime Scene?
Starmer Steps Back from Trump’s ‘Board of Peace’ Amid Strained US–UK Relations
Prince Harry’s Lawyer Tells UK Court Daily Mail Was Complicit in Unlawful Privacy Invasions
UK Government Approves China’s ‘Mega Embassy’ in London Amid Debate Over Security and Diplomacy
Trump Cites UK’s Chagos Islands Sovereignty Shift as Justification for Pursuing Greenland Acquisition
UK Government Weighs Australia-Style Social Media Ban for Under-Sixteens Amid Rising Concern Over Online Harm
Trump Aides Say U.S. Has Discussed Offering Asylum to British Jews Amid Growing Antisemitism Concerns
UK Seeks Diplomatic De-escalation with Trump Over Greenland Tariff Threat
Prince Harry Returns to London as High Court Trial Begins Over Alleged Illegal Tabloid Snooping
High-Speed Train Collision in Southern Spain Kills at Least Twenty-One and Injures Scores
Meghan Markle May Return to the U.K. This Summer as Security Review Advances
Trump’s Greenland Tariff Threat Sparks EU Response and Risks Deep Transatlantic Rift
Prince Harry’s High Court Battle With Daily Mail Publisher Begins in London
Trump’s Tariff Escalation Presents Complex Challenges for the UK Economy
UK Prime Minister Starmer Rebukes Trump’s Greenland Tariff Strategy as Transatlantic Tensions Rise
Prince Harry’s Last Press Case in UK Court Signals Potential Turning Point in Media and Royal Relations
OpenAI to Begin Advertising in ChatGPT in Strategic Shift to New Revenue Model
GDP Growth Remains the Most Telling Barometer of Britain’s Economic Health
Prince William and Kate Middleton Stay Away as Prince Harry Visits London Amid Lingering Rift
Britain Braces for Colder Weather and Snow Risk as Temperatures Set to Plunge
Mass Protests Erupt as UK Nears Decision on China’s ‘Mega Embassy’ in London
Prince Harry to Return to UK to Testify in High-Profile Media Trial Against Associated Newspapers
Keir Starmer Rejects Trump’s Greenland Tariff Threat as ‘Completely Wrong’
Trump to hit Europe with 10% tariffs until Greenland deal is agreed
Prince Harry Returns to UK High Court as Final Privacy Trial Against Daily Mail Publisher Begins
Britain Confronts a Billion-Pound Wind Energy Paradox Amid Grid Constraints
The graduate 'jobpocalypse': Entry-level jobs are not shrinking. They are disappearing.
Cybercrime, Inc.: When Crime Becomes an Economy. How the World Accidentally Built a Twenty-Trillion-Dollar Criminal Economy
The Return of the Hands: Why the AI Age Is Rewriting the Meaning of “Real Work”
UK PM Kier Scammer Ridicules Tories With "Kamasutra"
×