BOE Expected to Hold Rates Amid Rising Inflation

The Bank of England is expected to hold interest rates steady at 3.75% on Thursday, despite inflation rising to a five-month high.

Inflation increased to 3.1% in August from 2.9% in July, driven largely by higher fuel and energy costs linked to the Iran conflict.

The nine-member Monetary Policy Committee remains divided, with some members voting for a rate hike. However, money markets are pricing in an 80% probability of rates remaining unchanged.

Economists warn that a more hawkish tone from policymakers could push UK gilt yields higher and strengthen sterling, weighing on domestically focused equities.