Bailey Warns High Energy Prices Could Force Another Rate Hike

Bank of England Governor Andrew Bailey has sent a warning signal to the financial markets. High energy prices could still push the central bank into raising interest rates, even after it held steady this week.

The Bank of England kept the Bank Rate at 3.75% in a 6-3 vote, but the message felt less relaxed than before. Bailey and several deputy governors sounded more open to tightening because expensive energy can seep into broader inflation by changing what households and companies expect prices and wages to do next.

Markets are now pricing an 80% chance of a hike in November, with traders penciling in four quarter-point increases over the next year. Bailey has previously said that the path is hard to judge, but the Monetary Policy Committee has not pre-committed to anything.