BoE's Lombardelli sees rates rising if energy prices stay high
Clare Lombardelli said higher energy costs could lift inflation expectations and wage bargaining, with Bank forecasts putting inflation at 4.2% in early 2027.
- On Thursday, Bank of England Deputy Governor Clare Lombardelli said interest rates will likely have to rise if energy prices remain elevated, unless there is clear evidence of a weaker economy.
- The Bank held interest rates steady at 3.75% earlier this month as inflation lifted to a five-month high of 3.1% last month, moving away from the 2% target.
- Households face a roughly 4% rise in the energy price cap from next week, while food inflation, recently at a two-year low of 1.3%, is predicted to move towards 4% next year.
- Lombardelli noted that monetary policy should not react mechanically to energy prices but must counter the risk that they feed into inflation expectations, wage bargaining, and price-setting behavior.
- The Bank predicts inflation will increase to around 3.7% in the fourth quarter of this year and 4.2% in the first quarter of 2027, reflecting material uncertainty about the shock's duration.
14 Articles
14 Articles
Global Market: BoE's Lombardelli says rates may need to rise if energy prices stay high
Bank of England Deputy Governor Clare Lombardelli said UK interest rates may need to rise if elevated energy prices persist and fuel broader inflation through wages, expectations and corporate pricing, unless economic activity shows clear signs of weakening.
Rate rise ‘increasingly likely’ if energy prices stay high, warns Bank deputy
A rise in interest rates by the Bank of England is looking “increasingly likely” if energy prices remain high, a deputy governor has said. Clare Lombardelli said energy price pressure could drive rate-setters to tighten monetary policy unless there is particular weakness in the economy. Ms Lombardelli, who has been a deputy…
The likelihood of an interest rate hike at the Bank of England has strengthened. Vice President Clare Lombardelli stated that tighter monetary policy may be necessary if energy prices remain high. The war in the Middle East...
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