{"id":782190,"date":"2026-09-25T13:26:09","date_gmt":"2026-09-25T13:26:09","guid":{"rendered":"https:\/\/www.newsbeep.com\/uk\/782190\/"},"modified":"2026-09-25T13:26:09","modified_gmt":"2026-09-25T13:26:09","slug":"high-energy-prices-will-make-it-harder-to-avoid-interest-rate-hike-bailey","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/uk\/782190\/","title":{"rendered":"High energy prices will make it \u2018harder\u2019 to avoid interest rate hike \u2013 Bailey"},"content":{"rendered":"\n

The governor of the Bank of England has said high energy prices will make it “harder” to maintain interest rates at their current levels and avoid an increase. <\/p>\n

Andrew Bailey indicated that the Bank could have to increase interest rates if energy prices “remain higher” amid pressure linked to the conflict in the Middle East. <\/p>\n

It comes only a day after a deputy governor at the Bank said a rate hike is looking “increasingly likely” if energy prices remain elevated. <\/p>\n

Mr Bailey was one of the six-to-three majority who voted to maintain UK interest rates at 3.75% earlier this month. <\/p>\n

\"A<\/a> (PA Graphics) <\/p>\n

On Friday, he told an audience in Oxford: “There is no question we are seeing the direct effects of the energy shock, but we are currently seeing subdued pass-through, but it is very early days. <\/p>\n

“The longer we go on with high energy prices, the harder it gets. <\/p>\n

“We haven’t increased bank rates but it’s going to get harder to maintain that stance as energy prices remain higher.” <\/p>\n

Inflation is widely predicted to keep rising over the coming months as higher energy costs continue to filter through, with households set to witness a roughly 4% rise in the energy price cap from next week. <\/p>\n

The Bank has predicted that inflation will increase to around 3.7% in the fourth quarter of this year and 4.2% in the first quarter of 2027. <\/p>\n

\"Line<\/a> (PA Graphics) <\/p>\n

Economists have widely predicted that the central bank is likely to increase interest rates later this year in a bid to help bring inflation down back to the Bank’s 2% target level. <\/p>\n

On Thursday, Clare Lombardelli, a deputy governor at the Bank, said during a speech in Warsaw that energy price pressure could drive rate-setters to tighten fiscal policy unless there is particular weakness in the economy. <\/p>\n

She said: “The longer higher energy prices persist, the greater the risk that indirect effects build and that inflation expectations, wage bargaining and price-setting behaviour begin to adjust in response. <\/p>\n

“On that basis, policy is increasingly likely to need to tighten if elevated energy prices persist, absent clear evidence of disinflation or weaker activity.” <\/p>\n","protected":false},"excerpt":{"rendered":"The governor of the Bank of England has said high energy prices will make it “harder” to maintain…\n","protected":false},"author":2,"featured_media":782191,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[41129,84,77273,1294,3682,814,235693,56,54,55],"class_list":["post-782190","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-andrew-bailey","tag-business","tag-deputy-governor","tag-economy","tag-energy-prices","tag-interest-rates","tag-the-bank","tag-uk","tag-united-kingdom","tag-unitedkingdom"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/782190","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/comments?post=782190"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/782190\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media\/782191"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media?parent=782190"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/categories?post=782190"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/tags?post=782190"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}