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BoE deputy signals Iran shock is less likely to embed inflation

Breeden said UK inflation would have been at the 2% target without the Middle East war, a stance that points to less aggressive policy pressure.

Reported · Written up by our desk · Central Banks

Bank of England Deputy Governor Sarah Breeden said during a European session that the UKs inflation picture would likely have been at the central bank 2% target if the Middle East war had not happened.

Breeden argued the Iran-related shock is less likely to become embedded in inflation dynamics that would require the BoE to lean against price pressures, adding that the central bank is in a good place to monitor developments.

In FX trading after her remarks, the British pound showed little reaction, with GBP/USD down about 0.1% to around 1.3520 as the US dollar rebounded.

The comments also suggested a softer view on the need for additional rate hikes, reinforcing a lower-for-longer bias that may limit near-term upside for the pound versus the dollar and euro, while keeping sensitivity to incoming inflation data.

Latest closeGBP/USD 1.354 ▲1.4%

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