Bank of England policymaker signals no immediate rate hikes as inflation would hit 2% target without geopolitical shocks.
Bank of England Deputy Governor Sarah Breeden stated that UK inflation would currently be at the 2% target if not for the inflationary effects of the Iran war. She emphasized that the latest inflation pickup stems from external supply-side factors rather than domestic pressures.
Breeden noted the BoE is in a ‘good place’ to monitor developments, suggesting patience in assessing geopolitical shocks. She added that inflationary impulses from the conflict are less likely to embed in wages or expectations, reducing the need for tighter monetary policy.
With the UK’s weak economic backdrop, Breeden argued there is little reason to raise interest rates. Policymakers will watch whether higher energy prices feed into broader inflation or remain temporary amid subdued growth.