BoE Governor Bailey says it is still early days on inflation risks from the Iran war but it is quite subdued so far

Governor commentary framed around "early days" on an external price shock is a familiar holding pattern: central banks have historically distinguished between the first-round energy impulse and second-round effects on wages and expectations, and the subdued read so far signals the former has not yet bled into the latter. The observation that monetary conditions have already tightened, because markets moved from pricing cuts to pricing hikes, is the more substantive line: in past episodes where market-implied tightening did the central bank's work for it, officials have tended to treat the repricing itself as a substitute for action, which puts the focus on the front of the curve and the spread between market pricing and the MPC's own language. Declining to validate market bets on four hikes, while calling the outlook too uncertain to judge, follows the standard pattern of governors neither endorsing nor disowning pricing they may later need to lean against. The QT point is procedural rather than directional, but the emphasis that planning predates the conflict reads as an attempt to keep balance-sheet policy on a separate, steady-state track, consistent with how the Bank has handled QT through prior shocks. Follow-ons to note are whether other MPC members echo the subdued inflation read, how the energy pass-through shows in upcoming prints, and whether the Bank's communications begin to characterise the market's tightening as excessive.