Bank of England deputy governor Sarah Breeden has declared that interest rates do not need to rise in June or July.

In an interview with the Financial Times, published this morning, Breeden said:

“We’ve got time to understand firstly the size of the shocks and secondly, how the economy is evolving.”

“You’re obviously correct that we can’t wait forever, but we don’t need to do it in June or July.”

Breeden, a member of the Bank’s monetary policy committee (which sets interest rates) added that the BOE was “in a good place to be able to watch what’s happening in the economy,” saying:

“We don’t need to rush to act.”

The Iran war, and the resulting jump in borrowing costs, is dampening the UK housing market.

My colleague Tom Knowles reports:

Fears of higher mortgage rates and rising inflation as a result of the Middle East conflict are leading to a subdued and downbeat housing market, according to estate agents.

Demand from potential homebuyers across England and Wales has shown a “noticeable softening” recently, according to a monthly survey of estate agents by the Royal Institution of Chartered Surveyors (RICS).

Members have told the professional body that buyers and sellers are becoming more cautious, and many agents have cited clients who are worried about whether inflation and interest rates will rise in the coming months, leading to slower sales, fewer homes on the market, and more price-sensitive buyers.

Good morning. We’re about to learn how much economic damage the UK suffered in the early weeks of the Iran war.

The first estimate of UK gross domestic product (GDP) in March, and for the first quarter of the year, is due to be released at 7am.

Economics fear the Middle East conflict, which began at the end of February, will have hit activity in the UK. The consensus is that GDP may have fallen by around 0.2% in March, a reversal of the 0.5% growth recorded in February.

For Q1 as a whole, City experts predict growth of 0.6%, up from 0.1% in October-December 2025.

But the outlook for 2026 looks tough, as economies are hit by rising energy prices, with food inflation set to jump too.

Fergus Jimenez-England, associate economist at the economic forecasting body NIESR, fears the UK economy faces “a year of weak growth and high inflation.”

“The UK economy is in a state of transition. It began the year with some momentum, as business sentiment recovered following the Autumn Budget, but conflict in the Middle East has since stifled that momentum.

As businesses adjust to this latest energy shock, leading indicators are sending mixed signals. Input price inflation has picked up sharply and job vacancies continue to fall, pointing to softer demand conditions ahead. At the same time, retail sales and PMIs have held up, although some of this strength may reflect firms and households bringing forward spending in anticipation of further price rises.”

The agenda

• 7am BST: UK GDP report for Q1 2026

• 7am BST: UK trade report for Q1 2026

• 9.30am BST: Survey of economic activity and social change in the UK

• 10.30am BST: Resolution Foundation event: Resetting Government economic priorities for the remainder of the Parliament

• 1.30pm US retail sales for April

• 1.30pm US initial jobless claims