Bank of England Governor Bailey sees little evidence so far of second-round effects from the inflation shock.

Bank of England Governor Bailey said there is currently little evidence that inflation is becoming embedded in UK price and wage setting. Speaking on Friday at the Institute of International Finance annual meeting in Bangkok, Bailey said the BoE is closely watching whether businesses and workers will demand higher prices and wages to offset their own rising costs, thereby triggering second-round effects from this inflation shock. "As far as the evidence we've seen so far, it's fairly limited. It's too early to draw conclusions," he said. UK inflation currently stands at 3.1%, above the central bank's 2% target, and is expected to rise to 4% in the coming months. The BoE believes such a high level of inflation requires a monetary policy response.