Bank of England Governor Bailey said in Oxford on Friday that the odds of a rate hike would rise if the price shock triggered by the Iran conflict persists. According to Sina Finance, he said the Bank of England has voted to keep rates unchanged since the conflict began, but that it would become increasingly difficult to maintain that stance if energy prices stay elevated for longer.

Bailey said policymakers cannot wait for clear evidence of second-round effects before raising rates, adding that it would be too late by then. He made the remarks during a panel discussion at an event hosted by Oxford University and the New York Fed.

On financial conditions, Bailey said they have tightened and must be taken into account. He also said the economy is in an era of frequent major supply shocks, most of them negative, while noting that artificial intelligence could bring a positive supply shock. He said the test is not whether such shocks can be predicted, but how they are responded to and how inflation is brought back to target.