Bank Holds Interest Rates Amid Middle East Tensions
The Bank of England is likely to maintain its interest rates next week despite rising tensions in the Middle East. Economists predict a seven-to-two vote in favor of keeping the base rate at 3.75%. This decision comes as the UK's inflation rate has eased back to a 15-month low, reaching 2.6% in June.
A slowdown in food and fuel prices contributed to this decline, providing some relief to the Monetary Policy Committee (MPC). However, economists expect inflation to rise again later this year due to higher energy costs feeding into household bills from July. The Bank had previously predicted that inflation would reach 3.25% by the end of the year.
Recent attacks in the Middle East and US threats have increased uncertainty over the outlook, with oil prices surging above $100 per barrel for the first time since May. This has raised concerns about potential supply disruptions and its impact on inflation. Governor Andrew Bailey is likely to address how these developments have influenced the Bank's outlook for inflation.