Bank of England Warns Inflation Will Rise Again Amid Middle East Tensions
The Bank of England has held its benchmark interest rate at 3.75% but warned that higher inflation is on the horizon due to ongoing tensions in the Middle East.
Bank of England Governor Andrew Bailey stated that 'inflation has fallen faster than we'd expected, but the conflict in the Middle East continues to mean high and volatile energy prices.' He added that this would cause inflation to rise again later this year.
The decision comes after the Federal Reserve held US interest rates steady on July 29, with some policymakers calling for a hike to combat surging inflation.
Three members of the Bank's monetary policy committee voted to increase the British rate by 0.25 percentage points to 4%.
The central bank's forecast projects that inflation will peak at 3.2% towards the end of 2026 before easing slightly, with economic growth expected to remain 'subdued' in 2026 and early 2027.