Bank of England Governor Andrew Bailey said on Friday that second-round inflation effects in Britain have remained subdued so far, despite recent energy price volatility tied to geopolitical tensions.
Speaking to Bloomberg TV, Bailey noted that the Bank of England’s Monetary Policy Committee (MPC) had voted 6-3 in July to maintain its benchmark interest rate at 3.75%, a decision he described as consistent with the BoE’s assessment of limited domestic inflation pressures. The governor acknowledged that energy prices had risen due to the U.S.-Iran conflict but emphasized that the impact on broader price growth in Britain had not yet materialized in a significant way.
Bailey also highlighted the softness in the labor market, which he said was restraining inflation by reducing workers’ bargaining power for higher wages. While financial markets have priced in a quarter-point rate hike by the end of the year, Bailey cautioned that this reflected concerns over potential escalation in the U.S.-Iran conflict rather than the BoE’s most likely policy path.
In July, Bailey had stated that the central bank was not signaling an imminent shift toward tightening policy. On Friday, he reiterated that the BoE’s stance remained data-dependent, with the MPC’s decisions guided by incoming economic indicators rather than speculative market movements.
The governor’s remarks follow the Jackson Hole, Wyoming symposium hosted by the U.S. Federal Reserve, where global central bankers typically discuss monetary policy frameworks and economic outlooks.
