Lombardelli says another UK rate rise is likely in the near term and won’t rule out back-to-back increases

Bank of England Deputy Governor Clare Lombardelli said the central bank is likely to raise its key interest rate again in the near future, unless there is evidence of weakening inflation¹. She said interest rates are likely to rise further².

Lombardelli also refused to rule out back-to-back rate rises, a step that would mean another increase coming directly after the Bank’s latest one³. UK interest rates could be hiked again in the near future if inflation does not ease, she said^4,5.

Her remarks came on Tuesday and were framed as a warning that a further hike in the “near term” is likely in order to calm inflation^4,5.

Why it matters to investors

Lombardelli gave specific reasons for her view. She said high energy prices and the resilience of UK growth mean the Bank cannot rule out consecutive increases³. She also said Britain’s “low-hire, low-fire” labour market may make it harder to ease wage pressures².

That combination matters for rate expectations. In Lombardelli’s account, the “low-hire, low-fire” pattern makes wage pressures harder to ease², while high energy prices and resilient growth argue against ruling out consecutive moves³. Neither factor, as she described them, points to a quick fall in inflation⁵. Taken together, she presented them as grounds for keeping the option of further tightening open¹.

The conditional in her message is important. The deputy governor tied the outlook to inflation data: the Bank is likely to raise again unless there is evidence that inflation is weakening¹. Inflation has been described in coverage of her remarks as soaring⁵.

What to watch

The main test is the next set of inflation figures. Lombardelli’s own condition for holding off is evidence of weakening inflation¹, so data showing price pressures easing would cut against another near-term move.

Wage data are a second test. Her concern that the “low-hire, low-fire” labour market will make it harder to ease wage pressures² means pay growth will be watched alongside headline inflation.

Energy prices are the third. Lombardelli cited high energy prices as one reason the Bank cannot exclude back-to-back increases³, and any change in those prices would bear on how her assessment evolves. The deputy governor did not commit to a specific meeting, but her comments leave the next one open to another increase rather than a pause^1,2.