Bank of England Keeps Rates Steady Amid Rising Inflation

The Bank of England has maintained its main interest rate at 3.75% despite rising inflation, which hit a five-month high due to the ongoing effects of the Iran war on fuel prices.

Although six members of the Monetary Policy Committee voted to keep rates unchanged, three members backed a quarter-point increase to 4%. The decision was widely anticipated, and financial markets believe it's more likely than not that the bank will raise interest rates at one of its next two policy meetings in November or December.

Bank Governor Andrew Bailey noted that while higher global energy costs have had a limited effect on price and wage setting in the UK so far, their long-term impact could be significant. He warned that if this volatility persists, it's likely inflation will exceed 4% in the first quarter of next year, pushing above the bank's target rate of 2%.