[BUG] Claude Code always asks for permission to read two levels above where it is run, even though it needs to read in a subfolder of current directory

Preflight Checklist

• [x] I have searched existing issues and this hasn't been reported yet
• [x] This is a single bug report (please file separate reports for different bugs)
• [x] I am using the latest version of Claude Code

What's Wrong?

• Run Claude from a project folder.
• Everything it needs is in current folder or a subfolder.
• Instruct Claude to make a plan to implement something.
• Claude starts planning.
• Claude needs to read some source code file.
• Claude asks for permission to read that specific file only.
• Why? It has permission to read anything in current folder. If it doesn't, I want to give it that permission. There should be a very simple "allow read" permission with path/glob.
• The options to grant permission are:
• Yes - but ask me again for the next file, and the next file, and the next file, wow this is painful.
• Yes, allow reading from {two levels up} - no way man, those are other projects, don't be confusing your context, just read from the _CURRENT FOLDER PLEASE_
• No … I give up

What Should Happen?

My expectations are:

• When planning, Claude has permission to read all files in the current directory.
• Claude should not ask for permission to read stuff or folders that are not relevant or even nearby.
• There should be simple way to set or customise permissions to prevent read of some folders/files, e.g. in settings.json
• Read settings should not be "bash" tool permissions - i.e. grep a file, cat a file are ok if they are read only.

Error Messages/Logs

Steps to Reproduce

• Run Claude from a project folder.
• Everything it needs is in current folder or a subfolder.
• Instruct Claude to make a plan to implement something.
• Claude starts planning.

Claude Model

Opus

Is this a regression?

I don't know

Last Working Version

_No response_

Claude Code Version

2.1.39

Platform

Google Vertex AI

Operating System

macOS

Terminal/Shell

Terminal.app (macOS)

Additional Information

This may be new behaviour, I don't see this all the time, I don't understand why it happens . The folder path has spaces in it, I hope that's not relevant.