Bank Holds Rates, Warns Iran War Could Spark Future Hike
The Bank of England has decided to hold interest rates at 3.75%, but policymakers warned that pressure to raise rates is building due to the ongoing conflict in Iran.
This marks the sixth time in a row that the Monetary Policy Committee (MPC) has not changed borrowing costs, and it follows a split vote among the nine-person committee, with six members voting to hold them steady and three calling for a rate hike to 4%.
According to Governor Andrew Bailey, global energy prices are volatile and likely to push inflation higher by the end of the year than previously expected.
The MPC now expects Consumer Prices Index (CPI) inflation to rise to about 3.75% by the end of 2026 and peak at around 4% by the start of 2027, up from its previous forecast of CPI at about 3.2% by the end of the year.