Bank of England Governor Bailey Warns of Uncertainty Despite Potential Ceasefire

Bank of England Governor Andrew Bailey has cautioned that even if a 60-day ceasefire is achieved in the conflict between the U.S., Israel, and Iran, uncertainty will persist, and it will not immediately pave the way for interest rate cuts. According to Jin10, Bailey stated that an agreement nearing completion does not alter his fundamental assessment of the risks this conflict poses to the UK economy. U.S. officials had previously indicated that the agreement was close to being finalized. Bailey remarked, "A 60-day ceasefire might help, but it does not completely resolve the issue." He also noted that such an agreement "still brings uncertainty, leaving questions about what will happen after 60 days." Bailey further mentioned that he has not entirely dismissed a scenario where energy prices fall rapidly without affecting core inflation. However, for this scenario to prompt the central bank to cut rates, "you must have greater confidence" that the shock will not last long.