LONDON — Bank of England Governor Andrew Bailey told CNBC the “warning signs are there” on inflation, but the central bank will need to see further evidence from the labor market before hiking rates.

It Bank surprised markets somewhat by keeping interest rates unchangedIt was supported by many investors and became the first central bank major to raise rates since the outbreak of the coronavirus pandemic.

Bailey was one of the official who had taken a more hawkish tone during the month leading up to November’s policy meeting. However, the Monetary Policy Committee voted 7-2 in favor to keep its benchmark interest rate at 0.1%. This is despite Bailey being among those officials. It strongly suggested that interest rates would need to increase immediately, and markets are now anticipating a rise at December’s final meeting.

Bailey responded to a question about whether Thursday’s Bank policy decision has damaged its credibility. Bailey stated that any previous statements that the MPC had to make on inflation were only conditional on the MPC’s ability to recognize medium-term inflation expectations as “deanchored”.

Bailey said that he didn’t have any evidence and that they don’t know yet. However, he did say that we were in a “very fragile period” because inflation was well above target.

“The bells are ringing and the warning signs are present, we must be vigilant, that is what we are doing.”

The MPC also voted 6-3 to continue existing program of U.K. government bond purchases at a target stock of £875 billion ($1.2 trillion).

Bailey stated that the decision to maintain rates at 0.1% was not an easy one. He also said that policymakers waited because they hadn’t seen any evidence about the condition of the labor marketplace after Sept. 30, when the furlough program was ended. The Bank was surprised to find that the Scheme had been ended by more than 1 million people.

He said, “Clearly this was an important time in history and shift in labor markets. And we haven’t yet seen any data which really gives us a good idea of the future.”

U.K. job vacancies hit a record 1.1 million in the three months to August, while the unemployment rate fell to 4.5%, indicating a tightening of the labor market and potentially higher wage growth.

Investors were left uncertain about whether the Bank will start the path towards policy normalization. At the beginning, market data indicated that the probability of a 15 basis-point hike was 64%.

Inflation in Britain slowed in September. It rose 3.1% annually, however analysts believe this will be temporary. August’s increase of 3.2% annually was the biggest since 1997 records started. This is far more than the Bank’s goal of 2%.

According to the Bank, inflation will rise to around 5% during spring 2022 and then fall back to the 2% target in late 2023.