Bailey hints at more Bank of England interest rate rises

The governor of the Bank of England (BoE) has warned that more interest rate rises are in the pipeline in order to bring sticky inflation down.

Andrew Bailey will say tonight at Mansion House that the impact of 13 consecutive rate rises is still filtering through the economy and should dampen inflation but more interest rate hikes might be needed to tackle rising prices.

“In the face of these inflationary pressures, monetary policy has been tightened. Over the last twenty months, we have raised the Bank Rate by nearly five percentage points. Some of that tightening is still to come through the policy pipeline, and we expect underlying inflationary pressures to recede as headline inflation falls,” he will say.

The governor of the central bank will insist that the BoE needs to “see the job through” on bringing down inflation despite the misery that it is causing UK households and businesses that have been hit with higher mortgage and borrowing costs.

"It is crucial that we see the job through, meet our mandate to return inflation to its 2% target and provide the environment of price stability in which the UK economy can thrive," he will say.

"Both price and wage increases at current rates are not consistent with the inflation target," Bailey is expected to say later on Monday.

"Currently at 8.7% in the latest data, consumer price inflation is unacceptably high, and we must bring it down to the 2% target."

Bailey is also is expected to say that lower energy prices and falling food costs will help ease price pressures for the rest of 2023.

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“UK headline inflation is set to fall markedly over the remainder of the year.”

Bailey will also say: “This largely owes to lower energy prices as last year’s substantial increases drop out of the annual calculation. Food prices should fall too as lower commodity prices feed through to prices in the shops.”

Watch: Bank needed to make ‘strong move’ after inflation report, says governor

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