The Bank of England deputy governor warned the prolonged Middle East conflict raises the likelihood of further rate hikes. Firms are still absorbing higher energy costs but have limited capacity; a persistent energy shock could spread inflation to the wider economy, lifting wage demands and goods prices. She said if energy prices remain elevated and there are no clear signs of cooling inflation or weaker activity, monetary policy will be increasingly likely to tighten. She added policy should no

The Bank of England deputy governor warned the prolonged Middle East conflict raises the likelihood of further rate hikes. Firms are still absorbing higher energy costs but have limited capacity; a persistent energy shock could spread inflation to the wider economy, lifting wage demands and goods prices. She said if energy prices remain elevated and there are no clear signs of cooling inflation or weaker activity, monetary policy will be increasingly likely to tighten. She added policy should not react mechanically to energy-price swings; policymakers must assess whether indirect and second-round effects are becoming entrenched.