BoE's Breeden sees 'increasingly appropriate' rate hikes amid inflation risks

Key facts

• Bank of England Deputy Governor Sarah Breeden stated it is 'increasingly appropriate' to respond to rising inflation risks by raising interest rates.
• Breeden warned against waiting too long to address potential second-round effects from high energy prices.
• The Bank of England's Monetary Policy Committee maintained the Bank Rate at 3.75% in September 2026.
• Three MPC members voted to increase the Bank Rate by 0.25 percentage points to 4%.

Bank of England Deputy Governor Sarah Breeden said on Thursday that it would be "increasingly appropriate" to respond to rising inflation risks by raising interest rates. Breeden, who is in charge of financial stability, advised policymakers not to delay in addressing potential second-round effects from high energy prices, warning that they might regret it. She noted that the longer and larger the shock, the more likely it is that policy will need to respond to material second-round effects. Breeden stated that while she was not ready to vote for a rate hike in September, she was mindful that the balance of risks had shifted. The Bank of England's Monetary Policy Committee (MPC) maintained the Bank Rate at 3.75% in September 2026, with three members voting to increase it by 0.25 percentage points to 4%. UK CPI inflation had increased to 3.1% in August 2026 and was expected to rise further. The MPC also voted unanimously to reduce the stock of UK government bond purchases, unwinding them at an annual average pace of £46 billion by the end of 2034.