Bank of England Governor Andrew Bailey said there is little sign that the surge in energy prices caused by the conflict between the United States and Iran is creating serious long-term inflationary pressure in the UK. Speaking in an interview with Bloomberg TV at the Jackson Hole conference, he said, "So far, the second-round effects are fairly subdued." He also cited a softening labor market as a factor curbing inflation and said he could not make any promises about future economic developments. The Bank of England voted 6-3 to hold its policy rate at 3.75% in July, with Bailey supporting the hold.
BOE Governor's subdued inflation outlook and softening labor market may lead to lower UK bond yields.
BOE Governor's comments suggest limited inflation spillover, reducing rate hike expectations, which could lower yields.
