Bank of England’s Sarah Breeden warns of two-sided inflation risks as public anxiety grows

Sarah Breeden, the Bank of England’s Deputy Governor for Financial Stability, delivered a speech on September 30 that landed squarely on the tension keeping central bankers up at night: inflation is running hot, the public knows it, and the policy response could easily do more harm than good. UK inflation hit 3.8% in August 2025, with the BoE projecting a peak near 4% in September. That’s double the central bank’s 2% target, and British households are paying close attention. The public isn’t just watching, they’re worried A BoE/Ipsos Inflation Attitudes Survey pegged median short-term inflation expectations at 3.2% and longer-term expectations at 3.7%. When consumers start expecting prices to keep climbing, those expectations have a nasty habit of becoming self-fulfilling. Households aren’t only anxious about rising prices. They’re also worried about their jobs and the broader economy slowing down. According to BoE analysis, household sensitivity to food prices has nearly doubled in recent years. Breeden observed that external shocks, particularly in food and energy costs alongside payroll taxes, have been the primary drivers of the current inflationary wave. One data point offered...