Bank of England's Bailey: Second-Round Inflation Effects Remain Subdued for UK
Bailey Comments on Inflation and Monetary Policy
Limited Impact of Energy Price Surge on UK Inflation
Aug 28 (Reuters) - Bank of England Governor Andrew Bailey said on Friday that he still saw little sign that the surge in energy prices caused by the U.S.-Iran conflict was creating serious longer-term inflation pressures in Britain.
Subdued Second-Round Effects
"So far I think we're seeing quite subdued second-round effects," Bailey said in an interview with Bloomberg TV at a U.S. Federal Reserve conference in Jackson Hole, Wyoming, reiterating his recent comments on the inflation outlook.
Factors Restraining Inflation
Labour Market Conditions
Bailey highlighted a soft labour market — which limits workers' ability to bargain for higher pay — as one factor restraining inflation, but added that he could make no promises about how the economy would develop in future.
Monetary Policy Committee Decisions
Interest Rate Vote
Bailey was part of the 6-3 majority on the BoE's Monetary Policy Committee who voted to keep interest rates on hold at 3.75% in July, when he told a press conference that he did not want to signal that the BoE was "edging towards a hike".
Market Expectations
Rate Hike Speculation
Financial markets on Friday priced in one quarter-point rate hike by the BoE before the end of the year — pricing which Bailey described in July as reflecting market worries about an escalation of the U.S.-Iran war rather than the most likely path for BoE policy.
(Reporting by David MillikenEditing by William Schomberg)
