Bank of England's Bailey says companies are focusing on costs

Oct 13 (Reuters) - Bank of England Governor Andrew Bailey said companies in Britain are focusing intensely on containing their costs amid the surge in energy prices caused by the Iran war.

In an interview with CNN broadcast on Tuesday, Bailey reiterated his previous comments that pressure on broader inflation in the UK from the energy shock had so far been subdued, "but the longer this goes on, the harder it gets."

While the BoE would take into consideration the resilience to date of the UK economy, Bailey said there were signs of companies taking a cautious stance.

"When I go around the country — and I do a lot of talking to firms, and my colleagues do — there's a very big focus on cost containment in terms of when they're looking at the increase in their costs," he said.

A focus on cost-cutting could affect the labour market, although it was still "early days" for assessing the impact of the energy price surge in areas such as wages, Bailey added.

The BoE has kept borrowing costs on hold since the start of the Iran war, unlike the European Central Bank and the US Federal Reserve, which have both raised rates. 

However, investors are pricing the chance of a quarter-point rate hike by the BoE next month as a near certainty.

(Writing by William Schomberg; Editing by Mark Porter)