Bailey says he does not agree that UK inflation has become endemic
The Bank of England governor, whose committee raised rates to 4% on Thursday, leaves room for a second rise if the high energy costs of recent weeks return.
Bailey, whose Bank of England raised Bank Rate by 0.25 percentage points to 4% on Thursday, says he does not agree that inflation has become endemic. "I don't agree we have got endemic inflation," he says.
The denial is narrower than it sounds. On Thursday he told Bloomberg TV that a jump in inflation is "quite baked in at this point", even if tensions in the Middle East ease quickly. He added that another hike is "probably more likely than not" if the high energy costs of recent weeks return. At the Bank's press conference he said: "I do not think we have moved too late."
He also says private wages are at the upper end of the range for the inflation target. A Bank of England survey found no evidence that employers are building an inflation premium into pay awards.
The Bank now expects CPI inflation to rise to around 5% by the middle of next year. Its September projections had inflation peaking above 4% in early 2027. Headline inflation was 3.5% in September, up from 3.1%, with core at 2.8%.
Eight members backed the rise on Thursday. One wanted a larger increase of 0.5 points, to 4.25%.
Traders have not taken the denial as a promise of calm. They now see a 50% chance of a Bank of England rate rise in December, reversing the retreat in rate expectations since late October.
© Raydn · raydn.us
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