Bank of England may raise interest rates again

Bank of England Governor Andrew Bailey has hinted again that the Bank of England could hike interest rates further to help combat runaway inflation, reports Yahoo Finance UK.

Speaking at Oesterreichische Nationalbank's Annual Economic Conference in Vienna on Monday, the BoE's governor said: "We have raised the official rate four times so far and have made clear that in order to bring inflation down to target we are prepared to do so again based on the assessment at each of our meetings."

Bailey also warned that the cost of living crisis was hurting demand and that policy makers would take that into account when deciding how much to raise interest rates.

He said: "In the UK we are facing a very big negative impact on real incomes caused by the rise in prices of things we import, notably energy.

"We expect that to weigh heavily on demand. We judge the appropriate degree of monetary tightening taking that into account."

The Monetary Policy Committee recently voted to increase interest rates by 0.25 per cent, to 1.0 per cent - its fourth rise in a row from a historic low of 0.10 per cent in March 2020.

The governor defended the Bank of England amid claims it stoked inflation by letting demand get out of hand in response to the pandemic.

UK inflation jumped to 9 per cent in the 12 months to April, up from 7 per cent in March and the highest level it has reached since 1982.

UK inflation jumped to 9 per cent in the 12 months to April, up from 7 per cent in March and the highest level it has reached since 1982.

"What I reject is the argument that in our response to Covid the Bank's Monetary Policy Committee let demand get out of hand and thus stoked inflation.