According to a report published by The Guardian on November 11, 2026, the National Institute of Economic and Social Research (Niesr) has warned that the Bank of England risks holding interest rates higher for longer due to a hesitant response to rising inflation.
The UK economic thinktank criticized the Monetary Policy Committee's decision in the first week of November 2026 to increase the benchmark borrowing rate by a quarter-point from 3.75% to 4%. Niesr cautioned that without firmer monetary action, UK inflation—which currently stands at 3.5%—is likely to remain above the central bank's official 2% target until at least 2030.
Niesr Director David Aikman called on the central bank to adopt a more aggressive stance, warning that inflation is projected to cross 4% in early 2027, coinciding with key wage negotiations for that year. Aikman stated that a single additional quarter-point increase will likely be insufficient to prevent inflation expectations from becoming embedded in worker salary demands.
The current inflationary pressure is driven predominantly by elevated global energy prices stemming from conflict involving Iran, which began when the United States and Israel initiated military actions in late February 2026. While Brent crude oil briefly dipped below $90 per barrel on November 10, 2026, after U.S. President Donald Trump downplayed immediate further military action, Niesr noted that lingering refining and shipping challenges will keep consumer energy prices high. Furthermore, U.S. inflation data released for October 2026 showed a 0.4 percentage point increase over September, reinforcing international market concerns.
In its wider outlook, Niesr forecasts UK economic growth at 1.6% for 2026, decelerating to 0.9% in 2028 as high interest rates, persistent inflation, and tight fiscal policy weigh on consumer and business sentiment. The thinktank also raised concerns regarding Chancellor John Healey's fiscal management, estimating that repeated deferrals of budget choices could expose a £30 billion gap in public finances.
