Bank of England deputy governors Clare Lombardelli and Sarah Breeden are considering a shift toward rate hikes, warning persistent energy costs could entrench inflation through wage and price-setting; both voted last week to hold the benchmark at 3.75%.
The BoE said last week it could follow the U.S. Federal Reserve and European Central Bank in raising rates if the Iran war drags on. It forecast British inflation above 4% early next year, more than double its 2% target.
MPC member Swati Dhingra said the Iran war’s long-term inflation effects would become clearer over the winter. She said price rises were not as broad-based as in 2022 and the jobs market was weaker. Investors were assigning a 75% chance of a quarter-point hike in November, with another increase fully priced in by February.
