BOE Digs in Heels on Interest Rates Despite Inflation Risks

The Bank of England (BOE) has decided to keep interest rates unchanged at 3.75% for the remainder of the year, according to a strong majority of economists polled by Reuters.

This decision comes despite inflation risks, with inflation likely rising to 2.9% in July from 2.6% in June, further above the BOE's 2% target, according to a separate Reuters poll ahead of official data due on Wednesday.

Nearly 90% of economists polled by Reuters expect the Monetary Policy Committee (MPC) to leave rates unchanged at 3.75% this year, up from 83% last month.

The BOE expects inflation to rise above 3% later this year, and while financial markets are still pricing in one quarter-point rate rise by year-end, no economist forecast a rate change at the next MPC meeting in September.