The Bank of England will probably need to raise interest rates next month and again in early 2027 to combat rising inflation, its chief economist has said.

Signalling a sharp rise in mortgage payments for an estimated 2.3 million homeowners who will have to refinance their loans next year, Huw Pill said that while the decision to nudge interest rates from 3.75% to 4% earlier this month was a “significant step” towards getting monetary policy into a better place, “we ⁠have further to go”.

Pill told the Financial Times : “My view would be, we will see evidence that motivates further rises,” adding that the central bank would “do ‌what is necessary to get inflation back to 2% through time”.

The chief economist is one of a number of the Bank’s policymakers who believe the UK economy has gained in strength over the last year, handing workers the power to bid up wages.

Recent figures showed the economy grew by 0.7% in the third quarter, to give an annual rate of growth that was only surpassed by the US among…