Bank of England Warns of Potential Rate Hikes Amid Rising Inflation

The Bank of England held interest rates at 3.75% on Thursday, but warned that prolonged conflict in the Middle East may require tighter policy to combat inflation.

The Monetary Policy Committee voted 6-3 to keep interest rates unchanged, with three members voting for a raise to 4%, in line with economists' median forecast in a Reuters poll.

The Bank of England predicted British inflation will top 4% early next year, citing the impact of global energy costs on price and wage setting in the UK. Governor Andrew Bailey warned that prolonged volatility may require rate hikes to ensure inflation falls back to the 2% target.