Arab Press

بالشعب و للشعب
Thursday, Mar 05, 2026

Look past the headlines and Bank of England's governor seems ready to flex his eyebrows

Look past the headlines and Bank of England's governor seems ready to flex his eyebrows

The Bank of England has announced that it's leaving interest rates and its quantitative easing programme unchanged. In practical terms, the Bank has done nothing to counter inflation. But that could soon change, says Ed Conway.

Once upon a time, which is to say about a century ago, central bankers did not communicate in the way normal people do.

Rather than telling the world what they were about to do, they used their eyebrows instead.

If the governor raised his eyebrows (it has always been a he, so far), that was a clear sign to markets and investors that something important was coming - a change in interest rates or financial regulation or something similar.

Now we're in the era of 24-hour TV news and social media, you might have thought that the eyebrows would no longer be necessary, but there's reason to believe the current governor - Andrew Bailey - is getting ready to flex them.

BoE governor Andrew Bailey


Today the Bank of England announced that it was leaving interest rates where they are at 0.1%, and would leave its quantitative easing (QE) programme, whereby it is creating money to buy government bonds, unchanged.

There were two members of the nine-person monetary policy committee voting to trim QE, but in practical terms, the Bank did nothing. No surprises.

Yet read deeper into the reams of documents the Bank released today, and you get the sense of an eyebrow moving somewhat - quivering if not rising. The key fact in the backdrop to this is that inflation - as measured by the consumer price index - is now comfortably above the Bank's 2% target.

Indeed, it's so far above target that the governor had to write a letter of explanation to the chancellor.

In that letter the governor trotted out the Bank's familiar position: yes inflation is high, yes this is higher than we expected, but even so, we expect it to fall back in due course. This will, so he wrote, be "transitory".

But while such pronouncements seemed confident earlier this year, they are becoming slightly less convincing as prices rise higher and higher. For one thing, the Bank now thinks that not only will CPI inflation rise above 4%, but it will also be there until the middle of next year. That's nearly a whole year of inflation at double the Bank's target.

For another, the Bank conceded that energy prices could well push that up even further. Finally, within the minutes, the Bank signalled that interest rates may soon go up. Developments, it said, "appear to have strengthened that case".

In the wake of these minutes, the traders betting on future changes in interest rates seemed to take this as a signal.

A small increase (0.15 percentage points) is now nearly a 90% probability next February, according to these markets. The eyebrows, in other words, seem to be signalling something.

Comments

Oh ya 4 year ago
Central banks can not raise interest rates to slow inflation. Countries are so far in debt they are borrowing money now to make ends meet. They would be bankrupt in a month if the rate goes up.

Newsletter

Related Articles

Arab Press
0:00
0:00
Close
Iran Says Its Strikes Target Only U.S. Military Assets and Denies Attacking Saudi Arabia
Drone Strike Hits U.S. Embassy in Riyadh as Middle East Conflict Escalates
Tom Brady’s Saudi Flag Football Event May Shift to U.S. as Middle East Conflict Disrupts Plans
Iran War Strikes Saudi Arabia at a Critical Moment for Its Economic Transformation
Saudi Cabinet Declares Kingdom Will Take All Necessary Measures to Defend National Security
United States Urges Citizens to Leave Fourteen Middle Eastern Countries as Iran War Escalates
Saudi Aramco’s Ras Tanura Refinery Targeted Again in Second Drone Attack Within Two Days
Saudi Pro League Orders Clubs to Continue Fixtures Despite Rising Middle East Conflict
Trump Pursues Major Civil Nuclear Agreement With Saudi Arabia Amid Regional Turmoil
Mass Drone Attacks Strike Gulf States as Iran Conflict Spreads Across Region
No Verified Confirmation of Ronaldo Departure Linked to Iran Conflict or AFC Suspension
No Verified Evidence of Israeli Intelligence Arrests in Qatar or Saudi Arabia
Drone Attack Forces Temporary Shutdown of Saudi Arabia’s Largest Oil Refinery
Israel Intensifies Air Campaign in Tehran as Iran Expands Regional Retaliation
Iranian Strikes Escalate Middle East Conflict, Drawing Saudi Arabia Closer to Wider War
No Verified Confirmation of Drone Strike on King Fahd Causeway Amid Regional Tensions
No Verified Evidence Saudi Crown Prince Is Seeking to Weaken Israel Amid Regional Tensions
Reports Emerge of Drone Strike Near US Embassy in Saudi Arabia as Americans Told to Shelter
Saudi Arabia Weighs Strategic Options as Tensions With Iran Intensify
Iran Expands Strikes on Saudi and Qatari Infrastructure, Opening a New Front in Gulf Conflict
Western Navies Sound Alarm as Russian Shadow Tankers Transit NATO Waters in Defiance of Sanctions
U.S. Embassy in Riyadh Struck by Drones Amid Escalating Iran Conflict
Imola Emerges as Standby Venue if Bahrain or Saudi Arabia Grands Prix Are Cancelled
Uncertainty Clouds $24 Billion Gulf Investment Linked to Paramount–WBD Deal
Middle East Strikes Disrupt Qatar LNG, Saudi Refining and Israeli Energy Fields
Gulf States Signal Possible Collective Action Over Iran’s Escalating Strikes
Saudi Arabia Summons Iranian Ambassador After Cross-Border Attacks
Saudi Arabia Intercepts Drones Targeting Ras Tanura Oil Refinery as Conflict Escalates
Saudi Arabia Clarifies It Supported Diplomacy With Iran, Not Military Escalation
Putin and Saudi Crown Prince Confer on Escalating Iran Crisis
Drone Strike Forces Shutdown of Saudi Arabia’s Largest Oil Refinery
Saudi Arabia Signals Harder Line on Iran as Regional Conflict Deepens
Strikes in Qatar and Saudi Arabia Pull Energy Infrastructure Deeper Into Expanding Middle East Conflict
U.S. and Israel Intensify Strikes on Iran as Conflict Expands to Lebanon and Gulf States
Violent Pro-Iranian Protesters Storm U.S. Consulate in Karachi
Missile Debris Sparks Fires at Dubai’s Jebel Ali Port Near Palm Jumeirah
Iran Strikes U.S. Fifth Fleet Headquarters in Bahrain Amid Wider Gulf Retaliation
Emerging Saudi–Turkish Alignment Draws Attention as Potential Strategic Challenge for Israel
Saudi Arabia Unveils $100 Billion Technology Investment Fund to Accelerate Post-Oil Diversification
Saudi Arabia Reaffirms Firm Commitment to Two-State Solution in Renewed Diplomatic Push
Saudi Arabia Launches Central Kitchen in Gaza to Deliver 24,000 Meals a Day
Saudi Arabia Announces $346 Million Support Package for Yemen in Renewed Humanitarian Push
Saudi Investors Increase US Equity Exposure Amid Domestic Market Weakness
Saudi Arabia Unveils Major Desert Gas Development in Strategic Shift Toward Diversified Energy Growth
Satellite Images Indicate Increased Aircraft Presence at Saudi Airbase Hosting US Forces
Telephone Diplomacy Sparks Tensions Between Two Key US Allies After Trump Intervention
Asian LPG Prices Surge After Damage Forces Saudi Aramco Export Disruptions
Saudi Arabia Unveils $100 Billion AI Infrastructure Fund to Challenge US and China
Saudi Stocks Close Lower as Tadawul All Share Index Falls 1.28 Percent
Saudi Arabia Launches Smart Mapping System to Enhance Pilgrim Experience at Holy Sites
×