BoE faces its toughest test in four years
Path to contain inflation from supply-side shocks is different compared with 2022–23
The effects of the US-Israeli war against Iran have put Bank of England policy-makers in a difficult position as they seek to control inflation expectations without placing undue downward pressure on growth.
Unlike in the eurozone, where inflation has stood firmly near the European Central Bank’s 2% target, prices in the UK have remained at above 3% since April 2025. This has damaged the BoE’s inflation-targeting credentials just as the UK faces another supply-side shock in the form of higher
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