Bank of England Set to Hold Rates Amid Iran War Inflation Concerns

The Bank of England is expected to keep its key interest rate at 3.75% for the remainder of this year and possibly into next, according to a Reuters poll.

This decision comes as inflation remains above the central bank's target of 2.0%, currently standing at 2.6% after dipping in June due to a brief de-escalation in the Iran conflict.

However, the re-escalation of tensions and subsequent increase in fuel prices are expected to reignite inflationary pressures, limiting relief for new Prime Minister Andy Burnham's plans to ease cost-of-living burdens.

A firm majority of 58 out of 70 economists polled believe that the Bank Rate will remain unchanged through 2026, while a minority predict a 25-basis-point lift or reduction.