Bailey Warns of Further Rate Hikes as Bank of England Holds Interest Rates

The Bank of England has maintained interest rates at 3.75% despite rising inflation and increasing pressure from higher energy prices.

According to the latest data, UK inflation increased to 3.1% in August, up from 2.9% in July, with higher fuel and energy costs linked to the Iran conflict driving much of the increase.

Bank Governor Andrew Bailey warned that further rate increases are becoming more likely if the energy shock persists, citing the risk that inflation becomes embedded in the economy.

The decision marks the sixth consecutive meeting at which rates have remained unchanged, with a 6-3 vote in favor of holding Bank Rate. Three members backed a quarter-point increase to 4%.