Bank of England Prepares for Possible Rate Hike Amid Ongoing Middle East War

The Bank of England held its benchmark interest rate at 3.75% on Thursday, but warned that it may need to raise rates if the Middle East war persists and pushes up energy prices.

Surging energy costs have had a limited effect on price and wage setting in the UK so far, according to Bank of England governor Andrew Bailey.

However, he noted that the longer this volatility persists, the bigger the impact it will have on inflation, and the more likely it is that the bank will need to raise the benchmark rate.

The decision came after UK inflation climbed to 3.1% in August, far above the central bank's 2% target.