After the policy decision, Governor Bailey said the Bank of England stands ready to adjust policy as the outlook changes. There is currently little sign that recent energy-price rises have become embedded and no evidence yet of second‑round inflation, but the risk cannot be ruled out and the BoE will remain vigilant. If the conflict persists and boosts inflationary pressure, the BoE may need to raise rates further. Bailey expects energy’s indirect effect to lift inflation by about 0.5 percentage

After the policy decision, Governor Bailey said the Bank of England stands ready to adjust policy as the outlook changes. There is currently little sign that recent energy-price rises have become embedded and no evidence yet of second‑round inflation, but the risk cannot be ruled out and the BoE will remain vigilant. If the conflict persists and boosts inflationary pressure, the BoE may need to raise rates further. Bailey expects energy’s indirect effect to lift inflation by about 0.5 percentage point in H2 2026, but the pass-through is occurring more slowly than in the April forecast. Domestic inflation is broadly easing; household inflation expectations have eased but remain elevated. The latest CPI print was below the BoE’s expectation, a welcome sign that inflation is continuing to fall.