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Bank of England Reinforces Option for Rate Hike This Year

  • Governor also says early tightening may hurt fragile recovery
  • U.K. is one of first G7 economies to weigh tightening policy
Bank of England Governor Andrew Bailey

Bank of England Governor Andrew Bailey

Photographer: Jason Alden/Bloomberg
Updated on

Bank of England Governor Andrew Bailey moved to reinforce the option that interest rates could rise as early as this year while cautioning about the limits of monetary policy to balance diverging forces in the U.K. economy.

The central bank’s key rate would become the tool of tightening policy to tame inflation, even before the current bond-buying program expires if necessary, Bailey said in a speech on Monday. Moving too soon, however, could disrupt the U.K.’s still nascent economic recovery, Bailey said.