Breeden Signals Support for Rate Hike Amid Inflation Risks

Bank of England Deputy Governor Sarah Breeden has signaled support for increasing interest rates in response to growing inflation risks. In a recent speech, she warned that policymakers should not delay action while waiting for signs of second-round effects from high energy prices.

Breeden stated that raising interest rates would be 'increasingly appropriate' and emphasized the importance of timely policy action. She noted that the larger and longer the shock, the more likely it is to see material second-round effects that policymakers need to respond to.

Her comments align with a recent change in tone from 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 raised rates, and markets are pricing in around 100 basis points of interest rate increases over the next year.