BOE's Bailey Blames Inflation Overshoot Entirely on Persian Gulf War as Markets Price 50 bps Hikes
Updated
Updated · investinglive.com · Jun 2
BOE's Bailey Blames Inflation Overshoot Entirely on Persian Gulf War as Markets Price 50 bps Hikes
2 articles · Updated · investinglive.com · Jun 2
Andrew Bailey said the Bank of England's inflation overshoot was entirely driven by Persian Gulf events, pinning the miss on the war in Iran rather than domestic price pressures.
That stance pushes back against market pricing for 50 basis points of BOE rate hikes over the next year, even as the UK economy remains weak.
Bailey's argument implies the inflation shock could ease once the war ends and oil prices fall, giving the BOE energy-led disinflation support.
Oil had already been falling before the Iran war, however, raising questions over whether Gulf events alone explain why inflation stayed above target.