BoE Deputy Governor Breeden Calls for Interest Rate Hike Amid Inflation Fears

Bank of England Deputy Governor Sarah Breeden has signaled that it may be time to raise interest rates in response to rising inflation. Speaking at a forum organized by the National Institute of Economic and Social Research, Breeden said it would be 'increasingly appropriate' for the Bank of England (BoE) to respond to growing inflation risks with higher interest rates.

Breeden emphasized that policymakers should not wait too long for signs of second-round effects from high energy prices, as this could lead to regrettable consequences. Her comments echo a recent shift in tone on the Monetary Policy Committee, which could pave the way for a rate hike in November. The European Central Bank and U.S. Federal Reserve have already taken similar actions.

Breeden acknowledged that financial markets are pricing in around 100 basis points of interest rate hikes over the next year. While she focused on the BoE's upcoming decision in November, she hinted that a first move may be necessary to address inflation concerns. She also noted that the BoE cannot ignore market expectations.