BoE’s Bailey Stresses Inflation Commitment Amid Market Resilience Concerns

• BoE Governor Andrew Bailey reiterated commitment to inflation target.
• Called for stronger financial markets to absorb future shocks.
• Noted increasing difficulty in avoiding energy shock’s inflationary impact.

Bank of England Governor Andrew Bailey stated on Thursday that monetary policy must maintain an unwavering commitment to returning inflation to its target. He underscored the necessity for policymakers to strengthen core financial markets, enabling them to absorb future shocks without amplification, noting that increased government debt absorption has coincided with greater fragility. Bailey observed that while markets are currently experiencing volatility, he does not perceive illiquidity or stress, though conditions are “some way from normal.” Furthermore, he remarked that although the inflationary impact from the US-Iran war’s energy-cost shock on broader UK inflation has been limited to date, it is becoming progressively harder to avoid.