BoE's Breeden (neutral) says firms and workers are likely to have less price and wage bargaining power, so second round effects less likely
Importance
Level 1
- Where we are now is very different to last energy shock in 2022
- Not wise to act before we have sufficient information
- Will know more on balance of risks and scale and duration of shock by April meeting
- Even with higher borrowing costs, Breeden does not expect a bust in borrowing as no boom before
- Says measures BoE put in place after mini-budget are doing their job
- Concerned that any reduction to bank capital would not go into increased lending, but instead to shareholders
- Says gilt market functioning well amid Iran war volatility
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