Bailey repeats warning that high energy prices raise inflation risk
The Bank of England governor says pass-through to prices is subdued for now, but persistent energy costs make the case for holding rates harder to sustain.
Published
Andrew Bailey said inflation risks rise the longer energy prices stay high, and that evidence of prices feeding through to the wider economy remains subdued at the moment.
The language repeats the conditional framing Bailey has used since September, that persistent energy costs make the Bank's no-hike stance harder to sustain. It does not add a new trigger for near-term policy action.
The bigger story for long-dated bonds has been the gilt market itself. Traders are already pricing four to five rate hikes through 2027.
That term-premium stress in gilts, not Bailey's restated caution on energy and inflation, is what has carried spillover risk for long-duration bonds globally. Today's remarks do not change that dynamic.