Bank of England (BOE) Governor Andrew Bailey said an outlook for "more persistent" inflation was behind a surprise decision to raise interest rates for the first time in three years.
"We've seen evidence of a very tight labor market, and we're seeing more persistent inflation pressures, and that's what we have to act on," Bailey told BBC News on Thursday. "We're concerned about inflation in the medium terms, and we're seeing things now that can threaten that."
The remarks represent a shift in tone for the U.K. central bank, which previously said most pressures on prices were temporary, or "transitory," and likely to pass in the next few months. Now, Bailey expects the consumer price index to top 6 percent in the coming months, triple the BOE's target.
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