LONDON, (Reuters) – The Bank of England must act if there are expectations of higher inflation driving up wages. Andrew Bailey, BoE Governor, said this in keeping with his message last week about the direction of monetary policies, which led to a jolt on financial markets.

Bailey spoke during an internet question-and-answer session organized by the BoE. Bailey explained that once there is an increase of inflation, we need to make sure it doesn’t become widespread in the economy.

Bailey warned that the economy was at risk from more disruptions, particularly in labour demand. These could lead to higher inflation.

He stated, “And that’s the reason we would, and we will, have interest rates to be acted upon if that evidence becomes clear.”

Many investors were disappointed last week by the British central banks decision to keep its benchmark rate at zero. It was just two weeks after Bailey had said that the BoE should act to curb inflation expectations.