<div id="readability-page-1">  <p><time datetime="2026-04-30T12:04:58+01:00">    Thursday 30 April 2026 12:04 pm  </time>      <span> | </span><span> Updated: </span>   <time datetime="2026-04-30T12:05:13+01:00">    Thursday 30 April 2026 12:05 pm  </time></p>         <div>    <div>             <div>             <p>            <span>        Politics and Economics Reporter      </span>                </p>          </div>  </div>                                                                                                             Add as a preferred        source on Google                        </div>    <figure>    <div>       </div> <img width="742" height="495" src="https://imageproxy.pbkrs.com/https://www.cityam.com/wp-content/uploads/2025/01/01JDVVD0N5147SW88N3G465P3B-e1738165980509.jpg/query-dz03NDI?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" original-src="https://imageproxy.pbkrs.com/https://www.cityam.com/wp-content/uploads/2025/01/01JDVVD0N5147SW88N3G465P3B-e1738165980509.jpg/query-dz03NDI"/>  <figcaption>Governor Andrew Bailey voted for interest rates to be held. </figcaption> </figure> <p>The Bank of England has all but confirmed that interest rates will be hiked in the coming months as oil prices have shot up, despite opting to hold them in a meeting on Thursday. </p><p>The Bank’s Monetary Policy Committee warned interest rates could climb back to 5.25 per cent from the current level of 3.75 per cent, cancelling all six interest rate cuts seen over the last two years. </p><p>This sharp change in the direction of interest rates would take place in a scenario where oil prices exceed $130 per barrel and sustain high levels for the next year and a half. </p><p>Its updated forecasts suggested inflation would exceed six per cent while growth would also suffer a hit. </p><p>Policymakers voted 8-1 to keep interest rates at 3.75 per cent in an approach that suggests tightened financial markets, as per higher bond curves, has already given the MPC a lifeline on easing inflation. </p><p>The report said: “Tighter financial conditions would provide insurance against a more adverse outocme for inflation, while further evidence accumulated in the coming months and policy could be re-assessed.”</p><p>The Bank’s chief economist Huw Pill voted for interest rates to be hiked as the risks of second-round effects, where higher prices push up wages and vice-versa, could lead t inflation spiralling. He said a prompt hike to interest rates would “help mitigate upsdie risks to price stability”. </p><p>External member Catherine Mann said her vote to hold interest rates was “active” as financial market moves allowed her to wait to see further data.</p><p>Under a medium-risk scenario where oil and gas prices push up infaltion for the next two years, interest rates could still be hiked twice to 4.25 per cent. The best scenario where oil prices rapidly slide could also lead to an interest rate hike this year, according to forecasts in the report. </p><p>Most members said they leant towards the middle scenario where inflation only falls back to the target of two per cent until 2028. </p><h2 id="h-interest-rate-warning-to-stun-economists">Interest rate warning to stun economists</h2><p>Governor Andrew Bailey said the war was “causing inflation to rise again” as he defended the Bank’s decision to hold interest rates at 3.75 per cent. </p><p>“We think this is a reasonable place given the situation of the economy and the unpredictability of events in the Middle East. We’ll continue to monitor the situation and its impact on the UK economy very closely. </p><p>“Whatever happens, our job is to make sure that inflation gets back to the two per cent target after the initial impact of the war on energy prices has passed.”</p><p>In even the most benign scenario where oil and gas prices fall back rapidly to pre-war levels in the coming months, unemployment will rise to 5.45 per cent. It would mean that around 2m people would be left jobless. </p><p>The Bank’s growth projectiosn were revised down slightly from 0.9 per cent to a range between 0.8 and 0.7 per cent in the Bank’s report although the assumptions were based on interest rates remaining at 3.75 per cent. </p><p>As inflation rose to 3.3 per cent in the year to March, Bailey was forced to write to Chancellor Rachel Reeves explaining why price growth had surged. </p><p>He said there had been “a significant impact” on the supply of key goods including oil and gas.</p> </div>

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<p>The Bank of England has indicated potential interest rate hikes in the coming months, despite holding rates at 3.75% during a recent meeting. The Monetary Policy Committee warned rates could rise to 5.25% if oil prices exceed $130 per barrel. Inflation is projected to surpass 6%, with growth expected to decline. Governor Andrew Bailey emphasized the need to monitor the economic impact of rising energy prices, while the chief economist suggested that a prompt rate hike could mitigate inflation risks. Unemployment is also projected to rise to 5.45% under various scenarios.</p>

- The Bank of England's Monetary Policy Committee voted 8-1 to maintain interest rates at 3.75%, despite warnings of a potential increase to 5.25% due to rising oil prices.  
- The report predicts inflation could exceed 6%, with policymakers concerned about second-round effects on wages and prices.  
- Governor Andrew Bailey cited the war's impact on inflation and emphasized the need to monitor economic conditions closely, anticipating unemployment could rise to 5.45% even under favorable scenarios.

Bank of England signals interest rate hikes ahead despite April hold