Bank of England Governor Andrew Bailey said on Monday that he still thought that inflation was likely to fall sharply next year, broadly in line with forecasts the British central bank presented in early May.
Bailey told a parliamentary committee that he did not expect a new set of forecasts due on Aug. 4, which BoE staff were preparing, to show a fundamentally different picture.
However, possible further upward pressure on gas prices following Russia's invasion of Ukraine, or more persistent domestic cost pressures could change that, Bailey said. Investors see a nearly 70% chance of a bigger-than-usual, half-percentage-point rate hike by the BoE on Aug. 4. The central bank has already raised borrowing costs five times since December.
Bailey said there was "a range of things" on the table for the BoE's Monetary Policy Committee in August. Policymakers had to assess how much the shock to incomes from high energy prices would cool inflation through lower spending on other goods and services.
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