Interest rate rises likely in coming months, Bank of England economist says

AI desk brief

Bank of England chief economist Huw Pill signalled further rate rises next month and in early 2027 after an increase from 3.75% to 4% earlier this month. With inflation expected to reach 5% next spring amid Iran-war energy costs, Pill warned of wage-driven persistence, while acknowledging the Bank has not seen wage increases or firms passing on higher costs. Markets expect rates near 5% in 2027, which he called “not outrageous”. Tightening could weigh on gold if expected real yields rise, but energy inflation and conflict could support demand; nominal rate increases alone do not establish the balance.