LONDON, (Reuters) – Andrew Bailey, Bank of England Governor, stated Wednesday that there was a “very clearly” risk of high inflation in Britain’s economy if wages are rising due to a cycle of higher costs.

Bailey stated that wage and price settings are not the only factors. There is clearly an upside to this. “The second-round effects are what create the upside risk.”

Bailey explained to parliament’s Treasury Committee there are also risks of inflation coming in below the BoE forecasts for the next three year.

While the BoE raised its interest rate to 0.5% last month, 0.25% was lowered by four members of its nine monetary policymakers. However, four of them voted to increase it to 0.75%. It would have been the second half-point increase since 1997 when the BoE became independent.

British inflation soared to 5.5% in January, its highest level in 30 years. It will reach 7.25% by April, when 54% more regulated household electricity tariffs take effect.

Investors fully price in a 25-basis point rate increase at the BoE’s next scheduled meeting, which ends on March 17, and another one in May.

Bailey stated that the top British central bank monetary policymakers were not in disagreement about what level interest rates should reach, even though they disagreed this month on how fast.

He said, “It is important to not put too much focus on… whether or not we had a different perspective on the level we expect to reach as opposed to how fast we get there.”