Canada and the United States are making progress toward a trade agreement

The chief economist at the Bank of England, Hugh Bell, suggested that the bank will have to continue raising interest rates through 2027, in addition to the expected increase at its next meeting in December, to confront continued inflationary pressures, in light of the risks of rising energy costs being transmitted to wages and prices.

In an interview with the Financial Times published on Saturday, Bell said that the rate increase at the November meeting was an “important step” towards putting monetary policy on the appropriate path, but he added: “We still have more to do,” indicating that he expects indicators to emerge that justify additional increases in interest rates next year.

The Bank of England had raised the interest rate to 4 percent from 3.75 percent during its meeting in November, in the first increase since August 2023. Bell confirmed that the bank would take what is necessary to return inflation to its target of 2 percent.

These expectations come at a time when the bank expects British inflation to rise to about 5 percent in the middle of next year, more than double the target, due to the indirect effects of rising energy costs resulting from the Iranian war, especially its transmission to wages.

Bell considered that the end of the conflict between the United States, Israel and Iran, and the decline in energy prices that might accompany it, is a very weak possibility, which strengthens his vote preferences in favor of a new interest rate increase by a quarter of a percentage point in December.

Bell acknowledged that the bank was late in moving to confront inflation, saying: “In my opinion, we waited too long,” warning that the delay in raising borrowing costs reduced the bank’s ability to be satisfied with limited increases.

Markets are currently pricing in a cumulative monetary tightening of about 90 basis points by the end of 2027, which could push interest rates closer to 5 percent. Bell described these expectations as “not exaggerated.”

In a separate context, the report indicated that Bell does not intend to seek a third term as chief economist at the bank, when his current term ends in September 2027.

Canadian Prime Minister Mark Carney announced progress in trade negotiations with the United States, following what he described as lengthy and important discussions with US President Donald Trump, although the two countries have not yet reached an agreement.

Carney said on Saturday that he held lengthy and substantive talks with Trump, and that the two countries were making progress toward concluding a trade agreement, without specifying a date for reaching it.

Carney's statements came during his official visit to the Philippines, where he is also participating in meetings with leaders of Southeast Asian countries.

In a separate context, the Canadian Prime Minister confirmed that his country will not withdraw from NATO, stressing that determining the security arrangements for a free Europe should be in the hands of the Europeans and the alliance, not Russia.