Bank of England Holds Fire on Interest Rates Amid Rising Inflation

The Bank of England is expected to keep interest rates unchanged at 3.75% despite rising inflation in the UK, which has reached a five-month high due to fuel price increases caused by the Iran war.

Economists believe that most members of the nine-member Monetary Policy Committee will vote to maintain the current rate for the sixth consecutive meeting, as they want more evidence that higher inflation is feeding into underlying prices and wages.

According to official figures released on Wednesday, rising fuel prices and airfares drove up the UK's consumer prices index to 3.1% in August from 2.9% the previous month, exceeding the Bank of England's 2% target.

David Rees, head of global economics at Schroders, stated that the economic backdrop, including wages and the labor market, remains relatively soft, which should limit the extent to which imported price pressures become embedded in domestic wages and prices.