The Bank of England is seeing divisions among its officials regarding the approach to inflation risks in the UK. Deputy Governor Sarah Breeden highlighted that businesses are focusing on absorbing the energy shock and reducing costs rather than passing these costs on to consumers.
Breeden's remarks suggest a cautious stance on raising interest rates. She pointed to a weak labor market, which is keeping wage pressures low, and the resilience of the private sector following a stronger-than-expected GDP reading earlier in the week.
Meanwhile, two other officials appear to be advocating for interest-rate hikes, indicating a split in opinion within the Bank of England. This debate comes as UK businesses navigate the challenges posed by rising energy costs and economic uncertainty.