The governor of the Bank of England Andrew Bailey yesterday played down fears over inflation.
Speaking at a gathering of central governors in Jackson Hole, Wyoming, he suggested the Bank could still afford to wait and see before putting up interest rates.
Inflation has been on the rise as war in the Middle East pushes up prices, adding to pressure on the central bank to take action.
But Bank officials are trying to judge whether the effect will quickly fade or could instead lead to a damaging and longer-lasting price spiral. Bailey said so-called second-round effects were ‘subdued’, suggesting that he continues to resist pressure to increase rates.
That is despite inflation remaining elevated, with little sign of the Iran war being resolved.
