BoE's Bailey: No Serious Long-Term Inflation Pressures Yet
BoE Governor Andrew Bailey says UK inflation pressures remain subdued, citing a soft labour market, despite energy price spikes.
Bank of England Governor Andrew Bailey said on Friday that there is still little evidence that the surge in energy prices, triggered by the U.S.-Iran conflict, is creating serious long-term inflation pressures in Britain.
Speaking in an interview with Bloomberg TV at the U.S. Federal Reserve's Jackson Hole symposium, Bailey said, "So far I think we're seeing quite subdued second-round effects," reiterating his recent stance on the inflation outlook.
Bailey pointed to a soft labour market as a key factor restraining inflation, noting that it limits workers' ability to negotiate higher wages. However, he cautioned that he could make no promises about how the economy would evolve in the future.
Bailey was part of the 6-3 majority on the BoE's Monetary Policy Committee that voted to keep interest rates unchanged at 3.75% in July. At the time, he told a press conference that he did not want to signal that the BoE was "edging towards a hike."
Financial markets on Friday priced in one quarter-point rate hike by the BoE before the end of the year. Bailey described this pricing in July as reflecting market worries about an escalation of the U.S.-Iran war, rather than the most likely path for BoE policy.