Bank of England Governor Andrew Bailey said Thursday that the ongoing war between Israel and Hamas poses a potential risk to the bank’s efforts to reduce inflation, CNBC reported.

Bailey told CNBC that in addition to the enormous human tragedy caused by the nearly four-week conflict, the potential fallout for energy markets was significant, threatening a resumption of price spikes.

“So far, I would say, we haven’t seen a significant increase in energy prices, and that’s definitely a good thing. But this is a risk. That’s obviously a risk going forward,” Bailey said.

Oil prices have fluctuated in recent weeks as investors watched developments in the Middle East amid fears that the fighting could escalate into a wider conflict in the energy-rich region.

The World Bank warned in a quarterly report on Monday that the price of crude oil could rise above $150 a barrel if the conflict escalates.

Brent crude rose 2.6% to $86.85 a barrel on Thursday.

Bailey said that if energy prices rise significantly, the central bank’s response will depend on overall economic conditions and how persistent policymakers believe price increases will be.

The Bank of England has been steadfast in its efforts to contain inflation, ending a streak of 14 consecutive interest rate hikes in September alone after data showed inflation was lower than expected.

On Thursday, the bank again left interest rates steady, but said monetary policy should remain tight for an “extended period of time.”

The Monetary Policy Committee voted 6-3 to keep the key rate at 5.25%, with three members favoring a further 0.25 percentage point increase to 5.5%.

“We will have to support them [ratele dobânzilor] in restricted territory for a while,” Bailey said. “Risks still remain. It is actually too early to talk about lowering interest rates,” he continued.

Inflation in Great Britain in September amounted to 6.7%, which is slightly higher than expected and did not change compared to the previous month. The bank now expects the CPI to average 4.75% in the fourth quarter of 2023, before falling to around 4.5% in the first quarter of next year and 3.75% in the second quarter of 2024.