Bank of England Chief Economist Hugh Pill said the Bank may need to raise interest rates further next month and in early 2027 to curb inflation. Earlier this month, the Bank raised rates from 3.75% to 4%. Inflation is expected to reach 5% next spring, driven by rising energy prices due to the war in Iran. Pill expects workers to demand substantial pay rises, which could keep inflation high for longer. However, the Bank has yet to see evidence of wages rising or businesses passing higher costs on to consumers. Further rate rises would mean significantly higher mortgage repayments for an estimated 2.3 million homeowners refinancing next year. Many analysts fear that higher borrowing costs will hurt the manufacturing and construction sectors.