BOE's Bailey: Rate Hold 'Active' Choice to Handle Inflation Pressures

Bank of England Governor Andrew Bailey stated in a Q&A that holding rates at 3.75% was an active decision providing 'space' to combat inflation pressures, reinforcing a hawkish stance after earlier warnings on energy shocks. Initially, Bailey noted monetary policy cannot block energy price impacts on UK inflation, with effects worsening if Middle East conflict persists, and urged not waiting for second-round wage-price effects. Markets interpret this progression as supportive of a firmer Great British Pound vs US Dollar, elevated gilt yields, and heightened volatility around future rate paths.