Bank of England Holds Rates Steady Amid Ongoing Economic Uncertainty

The Bank of England decided to leave interest rates unchanged at 3.75%, despite inflation remaining above its 2% target, in a move that reflects policymakers' weighing of persistent price pressures against a weakening economic outlook.

According to the latest inflation data, CPI remained at 2.8% in May, which is below both market and Bank of England forecasts. While inflation remains elevated, easing food prices and lower energy costs helped offset increases in transport and fuel costs, reducing immediate pressure on the Monetary Policy Committee (MPC) to tighten policy further.

Markets are taking comfort from the recent US-Iran agreement, which has eased concerns over energy supply disruption through the Strait of Hormuz. Oil prices have fallen from their conflict-driven highs, reducing fears that the Middle East crisis would trigger a sustained inflation shock across the UK economy.