Bank of England Keeps Rates Steady Amid Growing Inflation Fears

The Bank of England's Monetary Policy Committee voted to keep interest rates unchanged at 3.75%, in line with economists' forecasts and a Reuters poll.

However, in a surprise move, the committee's communication highlighted the growing risk of higher inflation due to persistent energy prices.

The statement noted that while there has been little evidence so far of material second-round effects in price and wage-setting, the longer energy prices remain high or volatile, the greater the risk becomes.

As a result, the Bank of England warned that interest rates might need to rise if energy prices persist, even though they currently remain at the same level as before.