Speaking at an event hosted by the ECB yesterday, Andrew Bailey continued the hawkish rhetoric he used when announcing the fifty-basis point increase in interest rates last week.

He told the assembled journalists that having studied the surprisingly bad May inflation report that a strong message needed to be sent to the market.

There was discussion about hiking by fifty basis points over two meetings, but, on balance, the MPC felt that a single rise would hold a more effective message.

The effect of the employment and inflation reports made it clear that if the Bank was to be considered serious about the need to bring inflation under control, a strong message needed to be delivered.

The Treasury is believed to be concerned about the comments attributed to Bailey recently in which he was sanguine about rate hikes raising unemployment as demand in the economy.

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