Bank of England Governor Bailey warned that the longer the energy shock persists, the harder it will be to resist inflationary pressures.

Bank of England Governor Bailey said the energy cost shock triggered by the U.S.-Iran war currently has a relatively limited impact on overall UK inflation, but over time it is becoming increasingly difficult to avoid broader inflationary effects. "We need to focus on whether this inflation shock feeds through into indirect and second-round effects," Bailey said in an interview. "So far, that pass-through has been relatively modest in the UK, which is obviously encouraging to me. But the longer it persists, the harder it becomes to manage." When asked whether UK interest rates would be raised soon, Bailey did not answer directly. He said, "The analytical framework we have been relying on has not changed." Last month, Bailey warned that the longer oil and gas costs remain elevated, the harder it becomes to resist pressure to raise rates.