On Friday, May 29, 2026, in Reykjavik, Iceland, Bank of England Governor Andrew Bailey gave an interview during the Reykjavik Economic Forum.

Bank of England Governor Andrew Bailey has indicated that the UK's inflation rate might climb to 3.2% before it begins to recede.

Speaking to CNBC's Sara Eisen at the European Central Bank Forum in Sintra, Portugal, Bailey stated that the UK's latest annual inflation rate for May remained at 2.8%. He described the central bank's prolonged struggle to bring inflation down to its 2% target as "extremely frustrating."

Earlier this month, the Bank of England's Monetary Policy Committee voted 7-2 to keep the benchmark interest rate unchanged at 3.75%. The central bank faces a difficult balancing act, needing to curb inflationary pressures—exacerbated by higher energy prices due to conflict in the Middle East—while also contending with sluggish domestic economic growth.

Bailey noted that while financial markets had widely anticipated interest rate cuts from the Bank of England this year, the high degree of uncertainty stemming from the Middle East situation and persistent damage to energy infrastructure in the region has made the future path for UK interest rates highly unpredictable.