Bank of England Holds Fire on Interest Rates Amid Middle Eastern Tensions

The Bank of England is expected to hold interest rates at 3.75% next week, despite fresh uncertainty in the Middle East and US threats that could drive inflation higher.

Economists have predicted another seven-to-two vote in favour of holding the current rate, with experts at Oxford Economics and Nomura among those forecasting a stable rate for the rest of the year.

The latest meeting of the Monetary Policy Committee (MPC) on Thursday July 30 will also see it unveil fresh economic forecasts, amid a backdrop of easing inflation in recent months. The UK consumer price index inflation eased back to a 15-month low in June, at 2.6%, thanks to a slowdown in food and fuel prices.

However, inflation is now widely expected to swing back higher and further away from the Bank's 2% inflation target, with predictions that it will rise back to 3.25% later this year as higher energy costs feed into household bills from July.