Bank of England's Bailey sees 'quite subdued' second-round price pressures so far
Bailey said the Bank of England is watching pay settlements and would tighten policy if second-round effects from higher energy costs grow.
- On Friday, Bank of England Governor Andrew Bailey said in Bangkok that soaring energy prices have had limited wider effects on British prices, though it remains too soon to draw firm conclusions about second-round inflation impacts.
- Bailey described August's 3.1% inflation rate as "enormously frustrating," attributing the overshoot of the BoE's 2% target primarily to Middle East conflicts that pushed British government bond yields to their highest since 1998.
- Addressing the Institute of International Finance, Bailey reported that businesses prioritize "cost-cutting and a very big focus on the difficulty of passing through ." This reflects subdued second-round effects so far.
- Most economists now expect the Bank to start raising rates next month, after the Monetary Policy Committee voted 6-3 last month to leave rates unchanged at 3.75% following the US-Iran war outbreak.
- Policymakers face a timing dilemma: waiting for clear evidence of second-round effects risks acting too late, yet rising borrowing costs have given the Bank time to consider whether rate hikes are necessary.
22 Articles
22 Articles
Evening Standard
FTSE forges ahead but banks stutter on tax threat
Bank of England Governor Andrew Bailey played down inflation fears, although banks missed out amid fears of a tax hit.
Bailey: Businesses trying not to pass costs on to consumers
Bank of England governor Andrew Bailey has said businesses are resisting decisions to pass higher energy costs onto consumers and instead looking to narrow margins and find other savings. Speaking at an International Monetary Fund event in Bangkok, Bailey said firms were “clearly squeezing margins as well as cost cutting” in order to deal with [...]
BoE's Bailey sees 'subdued' second-round price pressures
Soaring energy prices so far appear to be having limited wider effects on British prices, but it is too soon to draw firm conclusions about how strong such second-round effects will be, Bank of England Governor Andrew Bailey said today.
The Economic Times
Times of IndiaBoE's Bailey says energy price pass-through remains limited, rate risks persist
Bank of England Governor Andrew Bailey said rising energy prices have had limited broader inflationary effects so far, but warned that second-round pressures remain uncertain. With inflation at 3.1%, above the 2% target, policymakers are weighing potential interest rate hikes against economic resilience, rising borrowing costs and geopolitical uncertainty.
BOE's Bailey Sees Little Evidence of Second-Round Inflation
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