Sarah Breeden, Deputy Governor for Financial Stability at the Bank of England, stated that the central bank must balance inflation control with the risk of stifling economic growth. She warned that maintaining overly restrictive policies for too long could harm employment and output.
In August 2025, UK inflation reached 3.8%, with projections suggesting a peak near 4% in September. This figure is double the Bank of England's 2% target. As of late 2026, the Bank Rate is set at 3.75%.
A survey by the Bank of England and Ipsos indicates that median short-term inflation expectations are 3.2%, while long-term expectations stand at 3.7%. Household sensitivity to food prices has nearly doubled in recent years.
Breeden noted that only 10% of households plan to seek higher wages due to inflation. She characterized the current inflationary wave as supply-driven and externally generated, citing food, energy costs, and payroll taxes as primary factors.
