Bank of England Chief Says Letting Inflation Rise During Iran War Uncertainty Is Justified

Andrew Bailey warned that attempting to bring inflation back to the bank’s 2 percent target ’too quickly‘ could ’cause undesirable volatility in output.’

The Bank of England in London on Feb. 3, 2025. Toby Melville/Reuters

Bank of England Governor Andrew Bailey said on May 29 that allowing inflation to rise above the bank’s 2 percent target is justified, given the economic impact of the conflict in the Middle East.

“The conflict in the Middle East has led to sharp increases in global oil and gas prices as transit through the Strait of Hormuz has been curtailed and critical infrastructure in the region has been damaged or destroyed,” Bailey told the Reykjavik Economic Conference. “This is a big negative supply shock to the world economy.”