BOE’s Breeden surprised by UK economy’s resilience to energy shocks

Sarah Breeden, the Bank of England’s Deputy Governor for Financial Stability, expressed surprise at how well the UK economy has absorbed recent energy shocks. Her comments, made in the context of ongoing concerns about the impact of energy-price increases linked to geopolitical tensions, indicate unexpected resilience in the UK’s economic performance. While the UK GDP has shown modest growth, Breeden highlighted that a prolonged energy shock could still necessitate higher interest rates, as the potential for inflationary pressures remains a concern. Despite this resilience, Breeden’s remarks suggest that the Bank of England remains vigilant regarding future policy adjustments. As the November meeting approaches, market participants will closely observe upcoming economic indicators, including inflation and wage growth data, which could influence the Bank of England’s decision.

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