BoE's Lombardelli Signals Rate Hike If Energy Prices Stay Elevated

Bank of England Deputy Governor Clare Lombardelli said on September 24, 2026, that interest rates will likely need to rise if elevated energy prices persist, absent clear evidence of disinflation or weaker economic activity. "The longer higher energy prices persist, the greater the risk that indirect effects build and that inflation expectations, wage bargaining and price-setting behaviour begin to adjust in response," Lombardelli said in a speech in Warsaw. She voted with a 6-3 majority to hold rates at 3.75% last week but said the case for a hike was building. She noted wage growth of around 3.25% could be consistent with the 2% inflation target long-term, assuming 1% productivity growth and normal import price inflation, but warned that may not hold if energy prices keep pushing up import costs. Markets on September 24 priced a roughly 75% chance of a quarter-point BoE hike in November 2026.