Breeden Signals Support for Rate Hike Amid Inflation Fears

Bank of England Deputy Governor Sarah Breeden hinted at raising interest rates to combat growing inflation risks. Speaking at the UK Macro Policy Forum, she warned that policymakers should not delay action while waiting for signs of second-round effects from high energy prices.

Breeden stated that 'raising Bank Rate would be increasingly appropriate' in response to inflation risks, aligning with a recent shift in tone from the Monetary Policy Committee. The Committee's change in tone could pave the way for a rate hike in November.

The European Central Bank and U.S. Federal Reserve have already raised rates, which may put pressure on the Bank of England to follow suit. When asked about financial markets pricing in around 100 basis points of interest rate increases over the next year, Breeden said she was focused on the next decision scheduled for November.