BoE Governor Bailey says they are seeing quite subdued second round effects so far and can watch this situation for now

Commentary on second round effects sits at the heart of the Bank's wage-price calculus: the distinction between a one-off price level shock that passes through and one that embeds via pay settlements and pricing behaviour is what has historically separated a hold from a hike, and a hike from cuts. A Governor characterising those effects as subdued, paired with an explicit willingness to watch, is the standard vocabulary of a committee leaning toward patience, and on previous occasions such framing from the Governor has tended to pull expectations toward a sooner or steeper easing path, with the gilt front end and GBP the first transmission points. The qualification 'so far' and 'for now' is deliberate optionality, leaving the response contingent on the next wage and services inflation prints rather than committed. What matters next is whether other MPC members echo the same read, since the committee has historically split between those focused on headline disinflation and those focused on persistence, and the median voter sets the path. As guidance rather than a decision, the signal is directional but soft.