The Bank of England is set to conduct a stress test to assess the impact of a prolonged energy shock, according to recent reports.
This move comes as the central bank maintains its current interest rate stance amid over the potential for renewed conflict in the Middle East, particularly involving Iran.
The decision reflects a broader effort to evaluate the resilience of the UK financial system to external shocks, especially those tied to energy markets.
Energy prices have been a focal point for central banks globally, with the Bank of England now explicitly factoring in the risk of a protracted energy crisis.
The central bank’s approach signals a cautious stance, as it seeks to manage the dual challenge of inflationary pressures and economic stability.
The decision to hold interest rates also underscores the uncertainty surrounding the geopolitical landscape, particularly in the Gulf region.