BoE Deputy Governor Breeden Signals Potential Interest Rate Hikes Amid Rising Inflation

Bank of England Deputy Governor Sarah Breeden has signaled that it may be necessary to raise interest rates in response to rising inflation. Speaking at a recent event, Breeden emphasized the importance of acting quickly to mitigate potential second-round effects from high energy prices. She noted that policymakers should not wait too long for signs of these effects, as they might regret it if they do.

Breeden's comments come amid a shift in tone on the Monetary Policy Committee, which could pave the way for a rate hike in November. The UK Macro Policy Forum organized by the National Institute of Economic and Social Research hosted Breeden's remarks. In addition to her own views, she echoed the sentiments of other Bank of England officials, including Governor Andrew Bailey and Deputy Governor Dave Ramsden.

Regarding market expectations of around 100 basis points of interest rate hikes over the next year, Breeden stated that she is focused on the upcoming decision in November. She emphasized the need to respond to growing inflation risks without waiting for clear evidence of a weaker economy. This stance aligns with the concerns expressed by Deputy Governor Clare Lombardelli, who warned that rates may have to rise if energy prices remain elevated.