Bank Holds Interest Rates Amid Rising Oil Prices

The Bank of England is set to hold interest rates steady at 3.75% next week, despite fresh uncertainty in the Middle East and rising oil prices.

Economists expect a majority of the Bank's rate-setting committee to opt for another seven-to-two vote in favour of holding the current rate, citing easing inflation and a weakening labour market.

The latest meeting of the Monetary Policy Committee (MPC) on Thursday July 30 comes amid a backdrop of inflation easing back to a 15-month low in June at 2.6%, thanks to a slowdown in food and fuel prices.

However, economists predict that inflation will swing back higher and further away from the Bank's 2% target as energy costs feed into household bills from July, with oil prices surging above $100 per barrel on Thursday for the first time since May.

Thomas Pugh, chief economist at RSM UK, believes oil prices will largely steer the path of interest rates for the next year, stating that a September rate hike would move firmly onto the table if prices remain close to $100 per barrel over the summer.