Inflation hits 9.4 per cent with all eyes now on Bank of England

The governor, Andrew Bailey, raised the prospect of a 0.5 per cent interest rate rise before the latest inflation figures were released. Now Threadneedle Street is preparing the ground for a more aggressive approach, writes James Moore

Governor of the Bank of England, Andrew Bailey (Frank Augstein/PA)

It’s not stopping. The latest CPI inflation figure rolled in at 9.4 per cent in the year to June, another rise (from the previous 9.1 per cent), another “worse than expected”, another “highest in 40 years”.

We will still be on that 40-year comparison when price rises inevitably reach double figures later this year. Inflation peaked at just over 12 per cent early in 1982. Most forecasters think this year’s peak rate will be in the region of 11-and-a-half per cent. But that’s slim comfort. And they’ve been wrong before.

Against this backdrop, the previous night’s intervention by the Bank of England’s governor, Andrew Bailey, shouldn’t have come as any surprise. What he had to say was similar to what other members of the rate-setting Monetary Policy Committee have been saying in their speeches: we take this jolly seriously and we’ll do what it takes.