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BoE’s Bailey says second-round inflation effects look subdued

Bailey signaled a wait-and-see stance before the BoE’s Sept. 17 policy decision, citing softening labor-market conditions.

Reported · Written up by our desk · Central Banks

Bank of England Governor Andrew Bailey said he does not see significant second-round inflation effects in the UK, in comments made in an interview with Bloomberg TV at the Jackson Hole Symposium, according to FXStreet.

Bailey pointed to what he described as quite subdued second-round effects, and referenced a softening labor market for some time, suggesting the BoE is taking a wait-and-see approach before its monetary policy meeting on September 17.

The BoE’s primary objective is price stability, with a 2% inflation target, and it adjusts base lending rates to influence interest rates across the economy, which in turn affects the value of sterling.

FXStreet also noted the framework in which higher rates can support the pound when inflation is above target, while the prospect of lower rates when inflation is below target can be negative for the currency.

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