"We adopted language which made clear that if we see signs of greater persistence of inflation, and price and wage setting would be such signs, we will have to act forcefully."
At a Mansion House speech given yesterday, Bailey said "there are no ifs or buts in our commitment to the 2% inflation target. That’s our job, and that’s what we will do".
The latest ONS figures, released today, show that inflation rose to a new 40-year high of 9.4% in June.
The Bank of England's Monetary Policy Committee has raised Bank Rate consistently since last December in increments of 0.25%, to its current rate of 1.25%, but Bailey says that "a 50 basis point increase will be among the choices on the table when we next meet".
He said: "At the MPC’s last meeting we adopted language which made clear that if we see signs of greater persistence of inflation, and price and wage setting would be such signs, we will have to act forcefully."
However, he noted that "50 basis points is not locked in."
Bailey added that "from the perspective of monetary policy, these times are the largest challenge to the monetary policy regime of inflation targeting that we have seen in the quarter century since the MPC was created in 1997".
He said the illegal invasion of Ukraine is "now the largest contributor to UK inflation by some way", but that despite an economic cost to the war "it will not deflect us from setting monetary policy to bring inflation back to the 2% target".
The next MPC meeting minutes are due to be released on the 4th of August.
