Bank of England signals need for “modest tightening” The Bank of England Governor remains convinced that the spike in inflation is temporary despite it being forecast to rise to a ten-year high by Christmas. The Bank has been forced to rip up its previous estimates in May that inflation would peak at 2.5% by the end of the year and is now predicting a sharp climb to 4%. Andrew Bailey conceded that the inflation rise was "marked by historical standards" but said price pressures would fall away next year as energy costs eased and supply chain bottlenecks resolved. On Thursday the Bank’s Monetary Policy Committee shifted position and admitted that "some modest tightening of monetary policy" would be needed over the medium term. Markets are betting on a first post-pandemic rate rise in the second half of next year, but Sanjay Raja, UK economist at Deutsche Bank, said: "Risks are clearly shifting to an earlier move – particularly if the economy outperforms in line with Bank expectations."