The Bank of England will have to raise interest rates if the economy evolves as expected, but the situation is “febrile”, with data giving a mixed picture, according to the central bank’s governor.
Andrew Bailey’s comments over the weekend suggest that a rise in interest rates at December’s meeting of the Monetary Policy Committee is not yet a done deal, despite data last week that showed employment had continued to rise after the end of the UK’s coronavirus furlough scheme, while inflation hit its highest level in a decade.
Investors were taken by surprise when the BoE held off raising interest rates this month, but are now betting that policymakers will move in December, with a small initial increase — the first since 2018 — taking borrowing costs from a historic low of 0.1 per cent up to 0.25 per cent.