Sarah Breeden: Bumps in the road?

Speech by Ms Sarah Breeden, Deputy Governor for Financial Stability of the Bank of England, at the Cardiff Business School, Cardiff, 30 September 2025.

The views expressed in this speech are those of the speaker and not the view of the BIS.

Good afternoon and thank you for the invitation to speak here at Cardiff Business School. It's a real pleasure to be here in Cardiff – a city that has shown the world the value of teamwork, whether through rugby at the Principality Stadium or in its history as a hub of global trade, as well as the importance of innovation, as exemplified by the regeneration of Cardiff Bay. Similarly, Cardiff Business School has been at the forefront of nurturing future leaders and thinkers, equipping them with the skills to navigate the ever-changing economic landscape. It is the economic landscape that I wish to focus on today. And specifically, the path that inflation has taken over the past year.

Inflation has come down significantly since it hit double figures in late 2022, supported by the restrictive stance of monetary policy. But the road has not been smooth. Having fallen back to our 2% target last year, headline inflation has risen again, back up to 3.8% in the latest data for August. And we think it will have increased again to around 4% for September.

This is too high. While we expect inflation to begin to fall back from next month and gradually return to target thereafter, it is right that we question the risks around this projection. Specifically, does this latest "hump" in inflation represent a mere "bump" in the road? Or is it a sign that the disinflationary process is veering off track – that inflation is proving sticky not bumpy, meaning our hump is in fact a plateau?