Bailey says BoE in no rush on oil inflation

Bank of England Governor Andrew Bailey said the central bank is in no rush to respond to an oil-driven inflation lift, even as he expects UK inflation to rise to about 3.2% later this year from 2.8% in May. He said inflation still looks on course to return to the 2% target, though later than he would have liked.

BoE holds 3.75% as yields do work

Officials said Bailey framed the recent rise in market rates as part of the policy transmission already in train. He said tightening “built into the bond yield curve” gives policymakers time to judge how higher energy costs pass through to the broader economy.

Officials said Bailey also downplayed the signal from higher crude prices, arguing oil is not much more expensive than it was before the Iran war began at the end of February. The comments, delivered during a central bank gathering in Sintra, Portugal, reinforce a patient reaction function even with inflation set to move further above target.

Officials said Bailey was part of the 7-2 majority that voted this month to hold the Bank Rate at 3.75%. He said he disagreed with Chief Economist Huw Pill, who voted for a rate increase on concerns about persistent inflation overshooting the 2% target.

The next focal point for rates markets is the Bank of England’s next policy meeting on August 6, 2026, when investors will look for any shift in the committee’s tone on inflation persistence and the role of market-driven tightening.