Bank of England Sticks to Tapered Rate Amid Middle East Uncertainty

The Bank of England is expected to maintain its interest rate at 3.75% next week, despite growing concerns over inflation and renewed hostilities in the Middle East.

Economists predict a seven-to-two vote in favour of keeping the current rate, citing easing inflation in recent months, which has fallen to a 15-month low of 2.6% in June.

The Office for National Statistics reported that UK consumer price index inflation eased back in June, with a slowdown in food and fuel prices providing an early positive signal for new Prime Minister Andy Burnham.

However, economists warn that inflation is expected to swing back higher, reaching 3.25% later this year as higher energy costs feed into household bills from July.