Bailey sees limited evidence of UK inflation spreading beyond energy
The Bank of England governor says it is too early to judge whether higher energy costs will feed through to prices and wages.
Key takeaways
- Bailey said evidence of wider price and wage pressures remains limited.
- UK inflation is 3.1%, above the Bank of England’s 2% target.
- Markets expect a 25-basis-point rate increase at the November 5 meeting.
Bank of England Governor Andrew Bailey said evidence that higher energy costs are driving broader price and wage pressures in the UK remains limited. He said it is too early to judge whether those costs will lead to more persistent inflation.
Speaking at an International Institute of Finance meeting in Bangkok, Bailey said businesses were trying to cut costs and finding it difficult to pass higher energy expenses on to customers, according to The Economic Times.
Inflation stands at 3.1%, above the Bank’s 2% target. It is expected to rise to 4%, according to Ekonomim. Markets expect the Monetary Policy Committee to raise its rate by 25 basis points to 4% at its November 5 meeting.
The Bank held its benchmark rate at 3.75% in September. Six committee members backed holding rates, while three favored a different decision, The Economic Times reported. Some policymakers have warned that waiting for clear evidence of second-round inflation effects could leave the Bank acting too late.
Bailey also said economic activity was stronger than expected. The International Monetary Fund raised its 2026 UK growth forecast to 1.3% from 1%, according to Ekonomim.
This article was produced with the help of AI technology. Based on reporting by the outlets listed above.
