Bank of England Holds Fire on Interest Rates Amid Rising Inflation Pressure

The Bank of England is expected to hold interest rates at 3.75% when its Monetary Policy Committee meets on Thursday, despite rising inflation in the UK.

This would be the sixth consecutive time the committee has kept rates unchanged since December.

Economists point out that the recent surge in inflation, which reached a five-month high of 3.1% in August, is largely due to higher energy prices, and not yet translating into wider price increases.

However, some experts warn that this trend may change soon, particularly with Ofgem's next energy price cap set to kick in from October, which will see household energy bills rise by 4% for a typical dual-fuel household.

Thomas Pugh, chief economist at RSM UK, predicts inflation will peak at almost 4% in early 2027 before gradually dropping back to 2%, while Charlotte O'Leary from the National Institute of Economic and Social Research expects the MPC to hold rates on Thursday but may eventually raise them as inflationary pressures mount.