BoE Governor Bailey says it's too early to form strong views on strength of second round effects

Commentary on second round effects goes to the core of the BoE's reaction function: the wage-price persistence channel has been the committee's stated reason for holding policy restrictive longer than headline inflation alone would justify, so a governor describing such effects as subdued leans against the hawks' central case. The qualification that it is too early for strong views is the standard hedge officials use before the data settle, and in past cycles the wage and services inflation prints, alongside the BoE's own agents' pay surveys, have been the deciding evidence rather than rhetoric. The framing that the economy is resilient but not strong enough is a classic soft-landing formulation, consistent with gradual easing rather than urgency. The attribution of gilt moves to Middle East developments is notable: it signals the Bank views the long end as externally driven rather than domestically mispriced, which historically means the front end stays anchored to the domestic data path while geopolitical risk premia trade in the belly and long end. The follow-ons are the next labour market and services CPI releases, whether other MPC members echo the subdued-persistence language, and any shift in the vote split that such commentary tends to precede.