Bank of England could raise interest rates next month

The governor of the Bank of England has given his clearest hint yet that interest rates may soon rise.

Speaking at an online panel discussion on Sunday, Andrew Bailey said that the Bank “will have to act” over rising inflation.

The Bank of England has already forecast that UK inflation will exceed 4%, more than double its target, as the economy recovers from lockdowns and the price of energy soars.

Latest figures show that prices rose by an average of 3.2% over the past 12 months.

“Monetary policy cannot solve supply-side problems — but it will have to act and must do so if we see a risk, particularly to medium-term inflation and to medium-term inflation expectations,” Bailey said.

“And that’s why we at the Bank of England have signalled, and this is another such signal, that we will have to act,” he added.

In response to the comments, international banks Goldman Sachs and ING released assessments showing that the Bank of England was likely to hike interest rates in November.

The next meeting of the Bank’s rate-setting Monetary Policy Committee (MPC) will be held on 4 November.