Sarah Breeden, Deputy Governor for Financial Stability at the Bank of England, warned on September 30 about two-sided inflation risks. UK inflation reached 3.8% in August 2025, with a projected peak near 4% in September, double the central bank’s 2% target. Public inflation expectations remain anchored above 3% for both short and long-term horizons, suggesting households do not believe in a quick return to target. The Bank of England views the current inflationary episode as fundamentally supply-driven and externally generated, not the kind of overheating that demands aggressive restrictive policy.
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