Monetary Policy Implications of the Energy Price Shock

With Spencer Dale, Christiane Baumeister, Jack Meaning and Stephanie Flanders The sharp rise in global energy prices following the escalating conflict in the Middle East has significant implications for both the global economy and the UK outlook. Before the shock, UK inflation had been expected to return to target by April 2026, and Bank Rate to fall further over the rest of the year. That is no longer the central expectation. This panel will examine the outlook for energy markets, the implications for inflation and growth, and the plausible scenarios that policymakers, risk managers and investors should now be considering. It will also explore the factors shaping the monetary policy response: when should central banks look through an energy shock, when might a firmer response be needed, and how should they communicate that trade-off? The discussion will also reflect on the lessons and warnings from 2022.