The Bank of England's chief economist, Huw Pill, has called for interest rates to rise, warning that a "wait-and-see" approach from fellow policymakers leaves the UK exposed to inflation risks stemming from the Middle East energy crisis. His intervention highlights a split at the top of the Bank over how to respond to ongoing geopolitical instability, with Pill arguing that delaying action could allow inflationary pressures to become entrenched rather than resolving the underlying uncertainty.

Speaking at the Edinburgh Chamber of Commerce, Pill said six months into the Middle East conflict its economic implications remain as unclear as when it began, making inaction risky rather than prudent. In July he was one of only two members of the nine-strong Monetary Policy Committee to back a rate rise, while the majority, including governor Andrew Bailey, opted to hold rates at 3.75 per cent; Pill argued that raising rates to 4 per cent would send a clear signal of the MPC's readiness to tackle emerging risks without necessarily starting a prolonged tightening cycle. Separately, Bailey has warned G20 finance ministers that a potential collapse of the AI bubble could trigger a global market correction, compounding volatility already caused by the US-Iran conflict's impact on energy supplies.