Bank Holds Interest Rates as Energy Prices and Memory Chip Shortage Loom

The Bank of England has decided to hold interest rates at 3.75%, marking the fifth consecutive time they have remained unchanged.

This decision comes despite concerns that energy prices and a memory chip shortage will drive inflation higher.

According to forecasts, UK inflation is expected to average around 3% this year, before slowing to 2.7% in 2027 and 1.8% in 2028.

The Bank of England's governor, Andrew Bailey, stated that 'inflation has fallen faster than we'd expected, but the conflict in the Middle East continues to mean high and volatile energy prices.'

Bailey added that the war will cause inflation to rise again later this year, but emphasized that any increase should be temporary.