Bank of England Freezes Interest Rates Amid Inflation Fears

The Bank of England has decided to keep interest rates unchanged at 3.75% for the remainder of the year, despite concerns about inflation risks. According to a poll by Reuters, nearly 90% of economists expect the Monetary Policy Committee to leave rates unchanged, up from 83% last month.

Although inflation is forecast to rise above 2% in July, the central bank believes that the UK economy has remained mostly resilient since the US-Israeli war on Iran began in late February. Energy prices have increased by about 25% since the conflict started, but there's little evidence of a spillover into the broader economy.

Some economists, however, are cautioning against complacency. Elizabeth Martins from HSBC notes that a big rebound in energy prices would certainly change things, and that the real game changer for the MPC is around second-round effects.