Bank of England policymakers will be under pressure to step up the pace of monetary tightening when they meet this week, following the lead set by the European Central Bank and US Federal Reserve.
Andrew Bailey, the BoE governor, has made it clear that while a 0.5 percentage point increase in interest rates is “not locked in”, it will be “among the choices on the table” when the monetary policy committee makes its policy decision on Thursday. The BoE has raised interest rates in 0.25 percentage point increments since December but pledged in June to act “forcefully” if needed in response to more persistent inflationary pressures.
If the MPC follows though, raising the central bank’s benchmark rate to 1.75 per cent, it will be the sharpest increase in borrowing costs for more than quarter of a century.