Bank boss tells BBC he won’t rush interest rate rises

Bank Boss Delays Rate Hike Decision Amid Global Energy Turmoil

At the International Monetary Fund meeting in Washington, Andrew Bailey, the Bank of England’s top official, has stated that the UK’s central bank will delay its decision on increasing interest rates. He emphasized that while the global economy faces a significant energy challenge, the Bank of England is cautious about acting too quickly.

The IMF issued a warning on Wednesday, advising central banks against hastening rate hikes following the Middle East conflict. Bailey acknowledged the IMF’s “serious advice,” highlighting the complexity of assessing the situation. He noted that the next rate decision is scheduled for 30 April, and the timing remains uncertain.

Before the US-Israeli strikes on Iran six weeks ago, economists anticipated the Bank of England would cut rates this year. However, the threat of rising energy prices has shifted expectations, with some suggesting rates might stay stable or even rise. Bailey explained that higher oil and gas prices are certain to influence inflation, but the broader economic picture complicates any clear action.

Uncertainties in the Economic Outlook

Central banks typically raise rates to curb inflation, yet they also lower them to stimulate growth when economic activity slows. Bailey pointed out that the dual effect of energy price increases—both inflating costs and dampening growth—creates a challenging environment for policymakers.

“There’s really difficult judgments to be made,” said Bailey. “We’re not going to rush to judgments on those things, because there are a lot of uncertainties around this, not just how it’s going to play out, but also how it’s going to pass through into the UK economy.”

He added that the UK’s reliance on gas for energy means the conflict’s impact will be substantial. Yet, the critical factor remains the duration of the crisis. “The faster there is a resolution to this situation—particularly in terms of energy supply from the Gulf—the easier and better the outcome will be,” he said.

Meanwhile, UK Chancellor Rachel Reeves criticized the Iran conflict during a media interview at the IMF event, linking it to price hikes and growth concerns. In contrast, US Treasury Secretary Scott Bessent argued that a “small bit of economic pain” is justified for long-term security. He highlighted the risk of Iran threatening Europe with nuclear missiles, framing security as a greater priority.

A UK government spokesperson clarified that there is no evidence Iran is targeting Europe with missiles. Bessent’s remarks coincided with the IMF’s warning that the US-Israeli war with Iran could push the global economy into recession, with the UK likely to suffer the most among major economies.