Business · Economy · 56 mins ago
Bank of England policymaker signals another near-term rate rise may be needed
Bank of England deputy governor Clare Lombardelli said another rate rise may be needed soon if inflation pressures do not ease.
The Bank raised its main interest rate from 3.75% to 4% last week, its first increase in more than three years.
The Bank expects inflation to reach about 5% in the second quarter of 2027, up from 3.5% currently.
The Iran war has pushed up energy costs, raising the risk that higher prices spread through the economy and affect wages.
Lombardelli said rates should rise gradually and that policymakers should watch jobs and hiring as well as headline inflation.
The timing of any further increase is uncertain and depends partly on progress towards ending the war.
Some economists expect another rise in February, while others think a cut could come as soon as December.
Bank of England deputy governor Clare Lombardelli said a further interest rate rise may be needed in the near term if inflation pressures do not weaken.
She warned that inflation risks remain tilted upwards as the Iran war drives energy costs higher.
The Bank raised its rate from 3.75% to 4% last week, its first increase in more than three years.
The Bank forecast inflation could reach around 5% in the second quarter of 2027, up from 3.5% currently.
Lombardelli said any further increases should be gradual and that she would monitor the labour market.
- Who
- Clare Lombardelli, deputy governor of the Bank of England.
- What
- She said there may be a case for another rate rise in the near term if inflation pressures do not weaken.
- When
- She made the comments in a speech on November 10, 2026.
- Where
- At the Bank of England Watchers Conference.
- Why
- The Iran war has driven up energy costs, and inflation risks remain tilted upwards.
This story does not have two clearly opposing sides.
The Bank of England raised its interest rate from 3.75% to 4%, its first increase for more than three years.
Clare Lombardelli said in a speech that a further near-term rate rise may be needed if inflation pressures do not weaken.
- Policymaker
- Clare Lombardelli, Bank of England deputy governor
- Rate rise
- From 3.75% to 4% last week
- Inflation forecast
- Around 5% in the second quarter of 2027
- Current inflation
- 3.5%
- Speech venue
- Bank of England Watchers Conference
3 sources
What people are saying
In the absence of evidence of weaker inflation pressures, I continue to think there is likely to be a case for a further increase in rates in the near term.
The balance of risks to inflation remains to the upside.
The energy shock has lasted longer and become larger than expected, activity has been more resilient and recent data suggest that underlying disinflation may have stalled.
But she said the Bank should further increase rates “gradually” and not try to “anticipate today the full policy adjustment that will ultimately be needed to return inflation sustainably to target”.