Bank of England Deputy Governor for Monetary Policy Clare Lombardelli said persistent UK inflation risks had risen as energy costs stayed high, keeping another rate increase in view.
At a Nov. 10 speech in London, Lombardelli said the energy shock had grown and lasted longer than expected. Recent indicators, she said, gave little sign that underlying price growth was continuing to ease. “The balance of risks to inflation remains to the upside,” Lombardelli said. She left open another near-term rate move if new data gave no sign of weaker price pressure.
Her assessment depends on whether higher energy bills affect prices and wage decisions across the economy, as well as on activity and spare capacity. Households and companies were already facing higher energy costs, but the Monetary Policy Committee (MPC) said it had seen little evidence so far that the shock had materially lifted other prices or pay. Some firms have absorbed costs through lower profit margins, hedging or fixed-price energy contracts; the committee said those buffers may be temporary.
At its meeting ending Nov. 4, the MPC voted eight to one to raise Bank Rate by 0.25 percentage points to 4%. The Bank announced the decision Nov. 5. Catherine L Mann preferred a half-point increase to 4.25%.
Consumer Prices Index (CPI) inflation was 3.5% in the 12 months to September, up from 3.1% in the 12 months to August, the Office for National Statistics (ONS) said. Bank staff projected CPI inflation at about 4.5% in the first quarter of 2027 and about 5% in the second quarter, using energy prices averaged over the 15 UK working days to Oct. 27.
Lombardelli said employers were slowing recruitment while job losses remained relatively low. She said weak hiring made it harder for young people to find work, while poor matching between jobseekers and vacancies could mean higher unemployment does less to ease wage pressure.
In a Nov. 10 interview with The Guardian, Lombardelli said a December increase was plausible but that she had not decided how she would vote. EconoTimes previously reported her comments on a possible December rate move.
The next UK CPI release is due Nov. 18. The BoE’s next rate decision is scheduled for Dec. 17.
