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'Harder to hold': Bailey warns soaring Iran war energy prices make UK interest rate rise 'increasingly likely'

From the Newshound archive · first published 25 September 2026 · last updated 26 September 2026.

'Harder to hold': Bailey warns soaring Iran war energy prices make UK interest rate rise 'increasingly likely'

Andrew Bailey has signalled that a UK interest rate increase is drawing nearer, arguing that stubbornly high energy costs linked to the Iran war are making it steadily harder to justify keeping rates at 3.75 per cent. The energy price cap is set to rise by roughly 4 per cent from next week, and the Bank forecasts inflation climbing to 4.2 per cent in early 2027. Mortgage deals are already creeping towards 6 per cent, squeezing borrowers already under pressure.

Deputy governor Clare Lombardelli said a rate hike is 'increasingly likely' if energy prices stay elevated, with Huw Pill, Megan Greene and Catherine Mann all voting for an immediate rise.

Oil prices remain above $100 a barrel — up from $72 before the Iran conflict began — with the war showing no indication of moving towards a lasting settlement.

The Bank stands alone among major central banks, with both the US Federal Reserve and the European Central Bank already raising rates to fight inflation.

MoreDaily MailMortgage pain as Andrew Bailey warns holding rates will 'get harder'The TelegraphBank of England chief warns of interest rate risesGB NewsBank of England warns interest rate hold will be 'harder to maintain' as energy prices spikeLBCBailey's warning: Bank of England governor says soaring energy prices could trigger interest rate riseCity A.M.Andrew Bailey sends warning as officials say interest rate hikes ‘increasingly likely’LBCHigh energy prices will make it ‘harder’ to avoid interest rate hike – BaileyThe IndependentHigh energy prices will make it ‘harder’ to avoid interest rate hikeThe TimesWe can’t afford to raise interest rates too late, says BaileyEvening StandardBank deputy says rate rise ‘increasingly likely’ if energy prices stay highFinancial TimesBank of England to raise rates in November if energy prices remain high
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