Until recently, markets had largely expected UK rates to fall over the year. That view has been challenged by the risk of renewed inflation as energy prices rise, leading to debate over whether rates will be kept on hold for longer, or possibly increased.

Central banks tend to raise rates when inflation runs hot, to curb demand, and reduce them when growth weakens, to support borrowing and spending. The present risk, Bailey suggested, is that elevated energy costs could push prices higher while also weighing on activity, complicating the policy response.

“There’s really difficult judgments to be made,” the Bank of England governor said. “We’re not going to rush to judgments on those things, because there are a lot of uncertainties around this, not just how it’s going to play out, but also how it’s going to pass through into the UK economy.”

Bailey said there had been indications before the conflict that the labour market was easing and that firms were finding it harder to pass price rises on to customers, factors that could limit the persistence of inflation. However, he said the Bank was still waiting for “meaningful data” showing how the conflict was affecting UK prices and growth.

He added that Britain’s reliance on gas meant the impact could be significant, but that the outcome would depend on how long the conflict lasted.