Bailey's comments reinforce a patient BoE reaction function, leaning against any near-term case for a rate move despite inflation set to climb to 3.2% later this year. His framing that the bond market has already done some of the tightening work, via higher market rates since the Iran war began, suggests the MPC sees current yields as doing part of the job without a formal hike. That stance puts the BoE on a visibly different track from the ECB, which raised rates this month, a divergence worth watching for sterling and rate-differential trades. The internal split with chief economist Huw Pill, who voted for a hike on persistence concerns, also signals the MPC isn't fully united, which could keep markets alert to any shift in tone at coming meetings.---BoE Governor Andrew Bailey says no rush to act on rates despite inflation set to hit 3.2% later this year, per Reuters interview in Sintra. Summary:Bank of England Governor Andrew Bailey said the central bank is in no rush to respond to higher oil prices, according to a Reuters interview in Sintra, PortugalHe said inflation is on course to return to the 2% target, though later than he would have likedBailey said past oil price increases are likely to push UK inflation to around 3.2% later this year, up from 2.8% in MayHe noted current oil prices are not much higher than before the Iran war began at the end of FebruaryBailey said tightening already built into the bond yield curve gives the BoE time to judge the pass-through of higher energy costsHe was part of the 7-2 majority on the BoE's Monetary Policy Committee that voted this month to hold rates at 3.75%Bailey contrasted the BoE's approach with the ECB, which raised rates this month for the first time since 2023, saying Britain has effectively already had a rate rise via higher market ratesHe said he disagreed with BoE Chief Economist Huw Pill, who voted for a rate rise this month over concerns about complacency and persistent inflation overshootBank of England Governor Andrew Bailey said the central bank remains in no rush to respond to higher oil prices, telling CNBC in an interview that inflation is still on course to return to the 2% target, albeit later than he would have liked.Bailey said past increases in oil prices are likely to push UK inflation up to around 3.2% later this year, from 2.8% in May, but stressed that the current cost of oil is not much higher than it was before the Iran war broke out at the end of February. Speaking at a conference hosted by the European Central Bank in Sintra, Portugal, Bailey said the BoE has the luxury of time partly because markets have already done some of the work. "We've had some tightening built into the bond yield curve, which gives us some time then to judge the pass-through of higher energy prices," he said.His comments echo remarks he made earlier this month, when he sided with the 7-2 majority on the Monetary Policy Committee that voted to hold rates at 3.75%. That decision puts the Bank of England at odds with the European Central Bank, which raised rates this month for the first time since 2023. Bailey argued the comparison is not as stark as it looks, since Britain has effectively already experienced a rate rise of its own, with market rates climbing since the start of the conflict after the BoE signalled it no longer expected to cut rates this year.Bailey also addressed a split within his own committee, saying he disagreed with Chief Economist Huw Pill, who voted for a rate increase this month on concerns that other policymakers were growing complacent about high inflation and that price growth risked persistently overshooting the 2% target. Bailey pushed back firmly on that characterisation. "We are not complacent at all," he said. "The evidence would suggest we will come back to target, but, frustratingly, later than we thought we would." This article was written by Eamonn Sheridan at investinglive.com.