Bank of England Urged to Hold Interest Rates Amid Inflation Concerns

City AM's Shadow Monetary Policy Committee (MPC) has called for interest rates to be held at 3.75 per cent despite inflation concerns due to the ongoing Iran war.

The Bank of England is under pressure to raise interest rates amid rising oil prices, with Brent crude standing at $106 per barrel on Tuesday morning, compared to a low of $72 in early July.

However, most economists on City AM's Shadow MPC, including Barclays chief UK economist Jack Meaning and Institute of Directors' chief economist Anna Leach, agree that there is little evidence of second-round effects or broader inflationary pressures.

Meaning said the Bank should retain a 'hawkish message' to signal interest rate hikes may be on the horizon, while Leach argued that an insurance increase in interest rates was necessary due to elevated price expectations and business costs squeezing margins for firms.