Bank of England Keeps Rates Steady Amid Energy Price Volatility

The Bank of England's Monetary Policy Committee (MPC) voted to keep the Bank Rate at 3.75% by a majority of 6-3, citing uncertainty over energy prices and their impact on the UK economy.

Consumer price index (CPI) inflation has fallen to 2.6%, but is expected to rise later this year due to higher energy prices. The Bank of England said it cannot influence energy prices, but is setting monetary policy to ensure economic adjustment is consistent with achieving the 2% inflation target sustainably.

The MPC noted that risks to the inflation outlook are tilted to the upside relative to the central projection in the July Monetary Policy Report, and that the scale and duration of the energy shock will determine the necessary policy stance. Energy prices remained volatile, with Brent crude at $84 per barrel and UK natural gas at 136 pence per therm as of July 28.

The committee also noted signs of underlying disinflation in recent data, driven by loose labour market conditions and higher interest rates faced by households and businesses.