BOE’s Breeden Plays Down Risk of Second-Round Inflation Effects

Bank of England Deputy Governor Sarah Breeden played down the threat of a wage-price feedback loop in response to the Iran War, saying a weak economy means workers and firms have less bargaining power. The comments suggest that while the geopolitical conflict presents an inflationary shock, the structural weakness in the domestic economy may prevent the kind of persistent 'second-round' effects that would necessitate more aggressive monetary tightening.